SBUX Starbucks Corp Company Reports | Morningstar

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Stock Analyst Note

Restaurants' Value Menu Looks Unappetizing as Market Sentiment Outruns Fundamentals

We expect sluggish sales growth to represent the key issue for the restaurant industry in 2023, following a year of investor concern regarding inflated input costs and margin compression. Though we see modest upside in wide-moat Domino's and view wide-moat Chipotle shares as fairly valued, the industry trades at a 5% market-cap weighted premium to our fair value estimates, suggesting that current entry prices are less than salient.

Sean Dunlop Jan 24, 2023

Stock Analyst Note

Restaurant Industry Offers Pockets of Opportunity; We're Buying Starbucks and RBI

We see pockets of attractive value in the restaurant industry despite a surge in share prices over the past two weeks, with the median company in our coverage trading at about a 10% discount to our intrinsic valuation. Our top picks, wide-moat Starbucks and narrow-moat Restaurant Brands International, enjoy even wider margins of safety, trading around 20%-25% below our $100 and $67 fair value estimates, respectively. We believe this warrants investor attention.

Sean Dunlop Jul 8, 2022

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