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Starbucks Corp SBUX

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Morningstar’s Analysis

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5-Star Price


Economic Moat




Comp Momentum, Store Optimization, and Operational Efficiencies Position Starbucks for Growth

R.J. Hottovy, CFA Sector Strategist

Analyst Note

| R.J. Hottovy, CFA |

Wide-moat Starbucks' fiscal 2020 fourth-quarter update offered a comprehensive outlook for fiscal 2021 and beyond, and while there are still macro and COVID-19 variables at play, we believe recent comparable momentum (notably, U.S. comps moved from an 11% decline in August to a 4% decline in September), early traction with new restaurant formats, and new operating efficiencies paint a picture of massive yet profitable market share gains in the years to come. We plan to raise our $90 fair value estimate by 5%-10% to reflect this upside and see the shares as moderately undervalued.

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Company Profile

Business Description

Through a global chain of more than 32,600 company-owned and licensed stores, Starbucks sells coffee, espresso, teas, cold blended beverages, food, and accessories. The company also distributes packaged and single-serve coffee, tea, juice, and pastries through its own stores, grocery store chains, and warehouse clubs under the Starbucks and Teavana brands under the Global Coffee Alliance partnership with Nestle. In addition, Starbucks markets bottled beverages, ice creams, and liqueurs through partnerships with Pepsi, Anheuser-Busch, Tingyi, and Arla. In fiscal 2020, Starbucks' Americas segment (including the U.S.) represented 70% of total revenue, followed by the international segment (including China) at 22%, then channel development at 8%.

2401 Utah Avenue South
Seattle, WA, 98134
T +1 206 447-1575
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Sep 30, 2020
Fiscal Year End Sep 27, 2021
Stock Type Cyclical
Employees 349,000