Starbucks Corporation transforms everyday moments into extraordinary experiences, serving millions their favorite coffee beverages worldwide. Renowned for its innovative approach and commitment to quality, Starbucks stands as a beacon in the restaurant industry, continually expanding its product offerings and global footprint. With a diverse range of beverages and food items, the company has built a loyal customer base that craves its unique brand experience. As we delve into Starbucks’ current valuation and growth potential, the question arises: do its fundamentals still align with its market position?
Table of contents
Company Description
Starbucks Corporation (SBUX), founded in 1971 and headquartered in Seattle, Washington, is a leading player in the global specialty coffee industry. The company operates through three segments: North America, International, and Channel Development, offering a wide array of products including coffee and tea beverages, roasted beans, ready-to-drink products, and various food items. With approximately 33K stores worldwide, Starbucks has established a strong brand portfolio that includes Starbucks, Teavana, and Seattle’s Best Coffee. As a pioneer in the coffeehouse experience, Starbucks continues to shape the industry through innovation and a commitment to sustainability, enhancing its role as a lifestyle brand.
Fundamental Analysis
In this section, I will analyze Starbucks Corporation’s income statement, financial ratios, and dividend payout policy to assess its overall financial health.
Income Statement
The following table outlines the Income Statement for Starbucks Corporation (SBUX), providing a clear view of its financial performance over the past five fiscal years.
| Income Statement | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | 29.06B | 32.25B | 35.98B | 36.18B | 37.18B |
| Cost of Revenue | 20.67B | 23.88B | 26.13B | 26.47B | 28.20B |
| Operating Expenses | 3.52B | 3.75B | 3.98B | 4.30B | 5.40B |
| Gross Profit | 8.39B | 8.37B | 9.85B | 9.71B | 8.98B |
| EBITDA | 7.35B | 6.24B | 7.40B | 7.12B | 5.38B |
| EBIT | 5.83B | 4.71B | 5.95B | 5.53B | 3.69B |
| Interest Expense | 0.47B | 0.48B | 0.55B | 0.56B | 0.54B |
| Net Income | 4.20B | 3.28B | 4.12B | 3.76B | 1.86B |
| EPS | 3.57 | 2.85 | 3.60 | 3.31 | 1.63 |
| Filing Date | 2021-11-19 | 2022-11-18 | 2023-11-17 | 2024-11-20 | 2025-11-14 |
Interpretation of Income Statement
Over the five-year period, Starbucks experienced a steady increase in Revenue, peaking at 37.18B in 2025. However, Net Income shows a concerning decline from 4.20B in 2021 to 1.86B in 2025, indicating potential profitability challenges. The Gross Profit margin has remained relatively stable, yet the significant rise in Operating Expenses suggests increased operational costs. In 2025, the decline in both EBITDA and Net Income signals a potential slowdown in growth and tightening margins, which investors should monitor closely for future implications on profitability.
Financial Ratios
Below is the financial ratios table for Starbucks Corporation (SBUX) from the fiscal years 2021 to 2025.
| Metrics | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | 14.45% | 10.18% | 11.46% | 10.40% | 4.99% |
| ROE | -78.92% | -37.69% | -51.59% | -50.49% | -22.93% |
| ROIC | 14.99% | 16.29% | 19.30% | 16.39% | 8.48% |
| P/E | 30.93 | 29.61 | 25.38 | 29.48 | 52.58 |
| P/B | -24.41 | -11.16 | -13.09 | -14.88 | -12.06 |
| Current Ratio | 1.20 | 0.77 | 0.78 | 0.75 | 0.72 |
| Quick Ratio | 1.00 | 0.53 | 0.59 | 0.56 | 0.51 |
| D/E | -4.44 | -2.73 | -3.08 | -3.46 | -3.29 |
| Debt-to-Assets | 75.19% | 85.08% | 83.54% | 82.33% | 83.11% |
| Interest Coverage | 10.37 | 9.56 | 10.67 | 9.62 | 6.60 |
| Asset Turnover | 0.93 | 1.15 | 1.22 | 1.15 | 1.16 |
| Fixed Asset Turnover | 1.99 | 2.21 | 2.28 | 2.02 | 2.09 |
| Dividend Yield | 1.63% | 2.33% | 2.32% | 2.33% | 2.84% |
Interpretation of Financial Ratios
Analyzing Starbucks Corporation’s financial ratios for FY 2025 reveals a mixed picture. The liquidity ratios indicate potential concerns; the current ratio stands at 0.723, and the quick ratio at 0.509, suggesting limited short-term financial flexibility. The solvency ratio is low at 0.088, indicating heavy reliance on debt with a debt-to-assets ratio of 0.831. Profitability margins are weak, with a net profit margin of 4.99% and return on equity at -22.93%, raising red flags about overall profitability. Efficiency ratios are robust, with receivables turnover at 29.11 and inventory turnover at 12.90, reflecting effective management. However, the high price-to-earnings ratio of 52.58 suggests that the stock may be overvalued, presenting a potential risk to investors.
Evolution of Financial Ratios
Over the past five years, Starbucks has experienced fluctuating financial ratios. While profitability ratios peaked in FY 2024, they have since declined in FY 2025, raising concerns about the company’s ability to maintain its earnings momentum. The liquidity ratios have generally trended downward, reflecting increasing financial pressure.
Distribution Policy
Starbucks Corporation (SBUX) has maintained a consistent dividend payment, showcasing a dividend yield of approximately 2.84%. The payout ratio is currently elevated at around 149%, indicating that dividends exceed net income, which raises concerns about sustainability. Despite this, the company engages in share buybacks, potentially bolstering shareholder value. It is crucial to monitor future earnings growth to ensure that these distributions remain viable and support long-term value creation for shareholders.
Sector Analysis
Starbucks Corporation (SBUX) operates in the competitive restaurant industry, known for its specialty coffee products, with strong positioning and a broad global presence. Key competitors include Dunkin’ and Peet’s Coffee, while its competitive advantages lie in brand loyalty and diverse product offerings.
SWOT Analysis:
- Strengths: Strong brand recognition, extensive store network.
- Weaknesses: High operational costs, dependency on coffee bean prices.
- Opportunities: Expansion in emerging markets, product diversification.
- Threats: Intense competition, changing consumer preferences.
Strategic Positioning
Starbucks Corporation (SBUX) holds a significant market share in the specialty coffee segment, benefiting from its strong brand recognition and extensive global presence. With approximately 33K stores worldwide, it faces competitive pressure from both established players and new entrants leveraging technological disruption, such as mobile ordering and delivery services. Benchmarking against peers, Starbucks maintains a robust position, but must continuously innovate to fend off competition and adapt to changing consumer preferences in the dynamic restaurant industry.
Revenue by Segment
The pie chart below illustrates Starbucks Corporation’s revenue distribution by segment for the fiscal year 2025, highlighting key performance areas within the company.
In 2025, Starbucks’ revenue from the Beverage segment reached 22.54B, continuing to dominate the overall revenue stream. The Food segment contributed 7.05B, while Other Products accounted for 7.59B. Notably, the Beverage segment saw a growth trajectory, albeit at a slower pace compared to previous years. The increasing focus on premium beverages could pose risks related to margin concentration, yet it reflects strong consumer loyalty. Overall, while growth persists, the company must navigate potential market saturation and rising operational costs in the coming years.
Key Products
Below is a table highlighting the key products offered by Starbucks Corporation, which demonstrate its extensive range of offerings in the specialty coffee and food market.
| Product | Description |
|---|---|
| Coffee Beverages | A variety of hot and cold coffee drinks, including espresso, brewed coffee, and seasonal specialties. |
| Tea Beverages | A selection of premium teas under the Teavana brand, including iced and hot options. |
| Ready-to-Drink (RTD) | Bottled coffee and tea beverages available in grocery stores and convenience outlets. |
| Food Products | An assortment of pastries, breakfast sandwiches, and lunch items made fresh daily. |
| Starbucks Reserve | Exclusive, small-batch coffees sourced from unique regions, offered in select locations. |
| Evolution Fresh | Cold-pressed juices and health-focused beverages available in stores and at grocery outlets. |
| Merchandise | Coffee brewing equipment, mugs, and other branded merchandise available in-store and online. |
Starbucks continuously innovates its product lineup to cater to evolving consumer preferences, ensuring a strong brand presence in the competitive restaurant industry.
Main Competitors
In the competitive landscape of the restaurant industry, Starbucks Corporation (SBUX) faces various strong contenders. Below is a table of the main competitors, including their market capitalizations.
| Company | Market Cap |
|---|---|
| MercadoLibre, Inc. | 105B |
| NIKE, Inc. | 97B |
| Starbucks Corporation | 97B |
| Carvana Co. | 87B |
| O’Reilly Automotive, Inc. | 84B |
| Sea Limited | 79B |
| Marriott International, Inc. | 79B |
| Airbnb, Inc. | 77B |
| Royal Caribbean Cruises Ltd. | 70B |
| Ferrari N.V. | 70B |
| Chipotle Mexican Grill, Inc. | 46B |
Starbucks operates primarily in the North American and international markets, competing with both traditional and modern establishments. The company’s strong branding and diverse product offerings allow it to maintain a significant foothold in the global coffee retail sector.
Competitive Advantages
Starbucks Corporation (SBUX) holds significant competitive advantages in the specialty coffee industry, primarily through its strong brand recognition and extensive global presence with 33K+ stores worldwide. The company’s commitment to innovation is evident in its continuous introduction of new products, such as plant-based offerings and seasonal beverages. Additionally, its strategic expansion into international markets positions it well for future growth. With an increasing focus on sustainability and digital engagement, Starbucks is poised to capture emerging opportunities, ensuring resilient performance amid evolving consumer preferences.
SWOT Analysis
This analysis aims to identify the strengths, weaknesses, opportunities, and threats facing Starbucks Corporation (SBUX) to inform strategic decision-making.
Strengths
- Strong brand recognition
- Extensive global presence
- Diverse product offerings
Weaknesses
- High dependency on coffee prices
- Vulnerability to economic downturns
- Limited menu innovation
Opportunities
- Expansion into emerging markets
- Growth in online and delivery services
- Increasing demand for sustainability
Threats
- Intense competition
- Supply chain disruptions
- Changing consumer preferences
Overall, the SWOT assessment reveals that Starbucks possesses significant strengths and opportunities that can drive growth, but it must navigate its vulnerabilities and external threats carefully. A focus on innovation and market expansion will be crucial for sustaining its competitive edge in the evolving coffee industry.
Stock Analysis
Over the past year, Starbucks Corporation (SBUX) has experienced significant fluctuations in its stock price, culminating in a notable bearish trend. These movements reflect broader trading dynamics that investors should consider when evaluating their positions.
Trend Analysis
Analyzing the price change over the past year, Starbucks’ stock has decreased by 7.46%. This decline categorizes the trend as bearish, supported by a standard deviation of 8.85, indicating high volatility in the stock price. The highest price observed during this period was 115.81, while the lowest was 73.11. Moreover, the trend exhibits acceleration, suggesting a consistent downward movement.
Volume Analysis
In the last three months, Starbucks has seen a total trading volume of approximately 5.75B shares, with buyer volume at 3.09B and seller volume at 2.63B, indicating a buyer-driven market with a buyer percentage of 53.75%. The trading volume trend is increasing, suggesting growing investor participation and sentiment leaning slightly towards buyers.
Analyst Opinions
Recent analyst recommendations for Starbucks Corporation (SBUX) indicate a cautious outlook. Analysts have assigned a rating of C+, suggesting a hold position. Key arguments include concerns over return on equity (scoring 1) and high debt-to-equity ratios (also scoring 1), which may limit growth potential. However, the discounted cash flow score (3) reflects some optimism about future earnings. Overall, the consensus for SBUX remains a hold for 2025, reflecting a wait-and-see approach amid mixed financial indicators.
Stock Grades
Starbucks Corporation (SBUX) has received consistent ratings from several reputable grading companies, indicating a stable outlook from analysts.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| TD Cowen | Maintain | Hold | 2025-12-01 |
| BTIG | Maintain | Buy | 2025-11-04 |
| RBC Capital | Maintain | Outperform | 2025-10-30 |
| Citigroup | Maintain | Neutral | 2025-10-30 |
| BTIG | Maintain | Buy | 2025-10-30 |
| Piper Sandler | Maintain | Overweight | 2025-10-30 |
| TD Cowen | Maintain | Hold | 2025-10-30 |
| Barclays | Maintain | Overweight | 2025-10-22 |
| UBS | Maintain | Neutral | 2025-10-21 |
| Morgan Stanley | Maintain | Overweight | 2025-10-20 |
The overall trend in grades for SBUX reflects a cautious yet stable sentiment among analysts, with several maintaining their ratings. Notably, companies like BTIG and Piper Sandler continue to express confidence with “Buy” and “Overweight” ratings, suggesting potential growth despite prevailing market challenges.
Target Prices
The consensus target price for Starbucks Corporation (SBUX) reflects a range of expectations from analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 165 | 84 | 105.27 |
Overall, analysts expect Starbucks’ stock to potentially reach around 105.27, indicating a moderate outlook with a significant high target of 165.
Consumer Opinions
Consumer sentiment towards Starbucks Corporation (SBUX) reveals a mix of loyalty and criticism, reflecting a complex relationship with its offerings.
| Positive Reviews | Negative Reviews |
|---|---|
| “Great quality coffee and ambiance!” | “Prices are getting too high.” |
| “Friendly staff and quick service.” | “Inconsistent drink quality.” |
| “Love the seasonal drinks!” | “Long wait times during peak hours.” |
Overall, consumer feedback highlights Starbucks’ strengths in quality and service, while pointing out concerns regarding pricing and consistency.
Risk Analysis
In evaluating Starbucks Corporation (SBUX), it’s essential to understand the various risks that could impact its performance. Below is a table summarizing the key risks associated with the company.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Risk | Fluctuations in consumer demand and preferences. | High | High |
| Supply Chain Risk | Disruptions in supply chain affecting product availability. | Medium | High |
| Regulatory Risk | Changes in labor laws and health regulations that could increase operational costs. | Medium | Medium |
| Competition Risk | Intense competition from both new entrants and established brands. | High | Medium |
| Economic Risk | Economic downturns affecting consumer spending. | Medium | High |
The most likely and impactful risks for SBUX include market fluctuations and supply chain disruptions. Recent events have shown that consumer preferences can shift rapidly, and any supply chain issues could significantly affect product availability and sales.
Should You Buy Starbucks Corporation?
Starbucks Corporation (SBUX) reported a revenue of 37.18B in FY 2025, reflecting a growth of 2.79% year-over-year. The company has a net income of 1.86B, resulting in a positive net profit margin of 4.99%. However, with a total debt of 26.61B against total equity of 97.02B, the debt-to-equity ratio stands at 27.47, indicating significant leverage. The return on invested capital (ROIC) is 8.48%, while the weighted average cost of capital (WACC) is 7.01%, suggesting value creation. The company holds a C+ rating, which indicates average performance.
Favorable signals
In the provided data, I identified several favorable elements. The company’s interest expense percentage stands at 1.46%, which is favorable as it indicates efficient borrowing costs. Additionally, the weighted average cost of capital (WACC) is recorded at 7.01%, which is favorable compared to the neutral return on invested capital (ROIC) of 8.48%. Furthermore, the price-to-book ratio shows a favorable value of -12.06. Lastly, the company has a favorable interest coverage ratio of 6.81 and an asset turnover ratio of 1.16, indicating effective use of assets.
Unfavorable signals
Conversely, there are significant unfavorable elements in the data. The company shows a revenue growth of only 2.79%, which is unfavorable. There is also a negative gross profit growth of -7.49% and an EBIT growth of -33.22%, suggesting declining profitability. The net margin growth is negative at -51.98%, and earnings per share (EPS) growth is down by -50.76%. Furthermore, the return on equity (ROE) is unfavorable at -22.93%, while the current ratio of 0.72 and quick ratio of 0.51 indicate liquidity concerns. Lastly, the price-to-earnings (PE) ratio at 52.58 suggests overvaluation.
Conclusion
Given the unfavorable global opinion on the income statement and ratios, along with a stock trend that is currently bearish, it might be prudent to wait for buyers to return before considering any investment. The data suggests caution due to the ongoing unfavorable elements impacting the company’s financial health.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Amundi Buys 433,786 Shares of Starbucks Corporation $SBUX – MarketBeat (Dec 06, 2025)
- Investors Heavily Search Starbucks Corporation (SBUX): Here is What You Need to Know – Yahoo Finance (Dec 03, 2025)
- Epoch Investment Partners Inc. Has $37.08 Million Holdings in Starbucks Corporation $SBUX – MarketBeat (Dec 06, 2025)
- Starbucks Stock: Turnaround Priced In Before It Happens (NASDAQ:SBUX) – Seeking Alpha (Dec 03, 2025)
- Starbucks (SBUX) Laps the Stock Market: Here’s Why – Nasdaq (Dec 03, 2025)
For more information about Starbucks Corporation, please visit the official website: starbucks.com
