Is sbux a good long term investment?
8/11/2024 08:09pm
**Starbucks (SBUX) presents a mixed investment scenario** with both positive and negative factors at play. Here's a detailed analysis:
1. **Financial Performance**: Starbucks reported a net income of $1.06 billion and diluted EPS of $0.93 for the quarter ending September 30, 2024. The company's net income year-on-year growth rate was -7.55%, total revenue year-on-year growth rate was -0.59%, and diluted EPS quarter-over-quarter growth rate was 36.76%. These figures indicate a stable financial performance with some challenges.
|Ticker|Name|Date|Total Revenue|Net Income|Diluted EPS|code|market_code|
|---|---|---|---|---|---|---|---|
|SBUX.O|Starbucks|2024 Q3|9.1139E9|1.0557E9|0.93|SBUX|185|
2. **Industry Position and Growth Prospects**: Starbucks is a leading player in the coffee and tea industry, with a strong global presence. The company's strategic initiatives, such as the introduction of new drinks and the acceptance of reusable cups, indicate a commitment to growth and innovation.
3. **Analyst Sentiment**: The consensus rating is "Moderate Buy" with an average price target of $87.15, which is slightly above the current price. This suggests that analysts believe the stock has potential for growth.
4. **Recent News and Developments**: Starbucks has been involved in various news and developments, including the introduction of new summer and holiday drinks, the expansion into the UAE, and the acquisition of a majority stake in a Chinese tea brand. These events could impact the company's future growth and performance.
5. **Valuation Metrics**: The P/E ratio is 20.9, the P/B ratio is -10.71, and the P/S ratio is 2.35. These figures indicate that the stock is reasonably valued compared to its earnings and sales.
|Ticker|Name|Date|P/E(TTM)|P/S|Price to Book Ratio|code|market_code|
|---|---|---|---|---|---|---|---|
|SBUX.O|Starbucks|20240809|20.9025|2.3547444681816674|-10.709591461726282|SBUX|185|
6. **Dividend and Shareholder Returns**: Starbucks has a history of consistently paying dividends and has a current dividend yield of approximately 0.87%. This can be an attractive feature for income-focused investors.
7. **Investor Sentiment**: The number of buy ratings is slightly higher than the number of sell ratings, indicating overall positive investor sentiment.
**Conclusion**: Starbucks' leading industry position, strategic growth initiatives, and positive analyst sentiment make it an attractive investment. However, the recent decline in net income and revenue growth rates may be a concern for some investors. The mixed financial performance indicators and the current high valuation metrics suggest a cautious approach. It is advisable to closely monitor the company's performance, market conditions, and any regulatory or economic changes that could impact the coffee and tea sector.