Analyse aandeel Starbucks

Starbucks' global growth, channel expansion, and brand diversification efforts provide more potential upside catalysts than most consumer cyclical names.

R.J. Hottovy, CFA 26 juli, 2013 | 11:07

ANALYST PERSPECTIVE

Starbucks has positioned itself for solid top-line growth and margin expansion through product innovations, cost structure re-engineering, and evolution into a diversified retail and consumer packaged goods platform. Representing about a third of coffee cups sold at retail, and 4% of the 90 billion coffee cups brewed at home in the U.S., Starbucks still has meaningful domestic growth potential, driven by platforms like VIA single-serve coffee, K-Cups, Verismo, and Seattle's Best Coffee (which are augmented by optionality opportunities like Evolution Fresh, La Boulange, and Teavana).

International growth is also intriguing, particularly in emerging markets like China, India, and Brazil. Formidable threats exist in both the retail and wholesale channels, but we believe a wide moat founded on strong brand equity, bargaining clout with its suppliers, and a highly leverageable model will be enough to stave off rivals.


VALUATION

Economic Moat      Fair value   Stewardship Rating   Starbucks
Wide    USD 78.00     Standard  
Moat Trend   Uncertainty   Sector  
Stable   Medium  

Cycl. consumptiegoed - 
restaurants                

 
KEY INVESTMENT CONSIDERATIONS

  • Shares may appear lofty at 28 times the midpoint of management's fiscal 2014 EPS target, but we believe a premium valuation is justified as the firm is a compelling growth and margin expansion story among large-cap consumer stocks. We would not require much margin of safety from our updated $78 fair value estimate before taking a position.

  • Geographic, channel, and brand diversification efforts provide more potential upside share price catalysts than most consumer names.

  • Despite its growth plans, we believe Starbucks can sustain a 35% dividend payout ratio, implying at least high-teen dividend growth over the next decade.

 


BULLS

  • A three-pronged approach (VIA, K-Cups, Verismo) should lead to market share gains in the $8 billion premium single-cup coffee category.

  • We remain confident that segment operating margins can return to approximately 35% over the next five years by increasing penetration of existing channels and diversifying to new channels.

  • A reinvigorated food menu, La Boulange pastry products, store redesigns, increased usage of social media tools, and the My Starbucks Rewards program have improved the Starbucks customer experience, penetrated new dayparts, and boosted unit level productivity.

 

 

BEARS

  • Because switching costs are minimal, there is little to prevent customers from trading to other specialty coffee chains including Starbucks, Tim Hortons, or McDonald's. Joh. A. Benckiser Group's consolidation of Peet's, Caribou Coffee, and D.E Master Blenders could evolve into a formidable specialty coffee rival.

  • Recent acquisitions (Evolution Fresh, La Boulange, Teavana) could take attention from the core Starbucks brand and add execution risk to management's already loaded agenda.

  • Volatile labor costs and commodity prices could weigh on quarter-to-quarter operating results.

 

 

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Effecten genoemd in dit artikel
Naam effectPrijsChange (%)Morningstar Rating
Starbucks Corporation70,39 USD-1,07
Over de auteur

R.J. Hottovy, CFA  R. J. Hottovy, CFA, is a director of equity analysis with Morningstar.