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Morningstar

Starbucks Shares Look Attractive

The stage is set for compelling top-line growth and margin expansion for years to come, writes Morningstar’s R.J. Hottovy.

We walked away from

We retain our $64 fair value estimate, and we believe today's pullback may be an attractive entry point for longer-horizon investors. As Starbucks rolls out its MOP and other digital platforms, enhances its food offerings, and introduces a wider offering of consumer packaged-food initiatives across new geographies in the years to come, we believe it sets the stage for compelling top-line growth and margin expansion in the consumer discretionary space and gives us confidence in our 10-year forecast, which calls for average annual top-line growth of 10% and operating margins approaching the mid-20s.

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About the Author

RJ Hottovy

Sector Strategist
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R.J. Hottovy, CFA, is a consumer strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is responsible for consumer discretionary and staples research. He has covered the consumer sector as an analyst and director of global consumer equity research for Morningstar since joining the company in 2008, and specializes in a broad range of consumer categories including restaurants, footwear and apparel retailers, consumer electronics retailers, fitness clubs, home improvement and furnishing retailers, and consumer product manufacturers.

Before joining Morningstar, Hottovy was a director and senior stock analyst for Next Generation Equity and an analyst for William Blair & Co., specializing in a wide range of retail and consumer product companies. He also spent two years at Deutsche Bank, covering waste management, water utilities, and equipment rental stocks.

Hottovy holds a bachelor’s degree in finance and a second degree in computer applications from the University of Notre Dame, where he graduated magna cum laude. He also holds the Chartered Financial Analyst® designation and is a member of the CFA Institute and the CFA Society of Chicago.

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