Melanie Diminico 2/22/19

Starbucks Company Analysis

General Information

Starbucks is an American company founded in 1971 in Seattle, WA. Starbucks is an

American coffee company and coffeehouse chain. They’re primarily a part of the

restaurants industry. Starbucks’ main competitors are Dunkin’ Donuts, McDonald's,

Maxwell House and Folgers. The company is headquartered in Seattle, WA. Their customers

are primarily men and women between the ages of 25-40. These middle-high income level

men and women make up about 49% of Starbucks’ customers. Young adults between the

ages of 18-24 make up 40% of their customers. Teenagers between the ages of 13-17 make

up just 2% of Starbucks’ customers. Starbucks’ sales increase from year to year. Their

operating expenses decrease from year to year. Their net income also increases from year

to year. Starbucks annual revenue for 2018 was $24.72B, a 10.42% increase from 2017.

Any growth in their revenues would be driven by an improving economy and the expansion

of menu offerings within the industry. Over the years, Starbucks has achieved significant

economics with superior distribution and supplier relationships.

Performance and Profitability

Starbucks’ sales increase from year to year. Their operating expenses decrease from year to

year. Their net income also increases from year to year. Starbucks annual revenue for 2018

was $24.72B, a 10.42% increase from 2017. Any growth in their revenues would be driven

by an improving economy and the expansion of menu offerings within the industry. Over
the years, Starbucks has achieved significant economics with superior distribution and

supplier relationships. As of 2/25, the company’s stock price is $71.05. Starbucks’ stock

price is trending up. In March 2016, there was a decrease in their revenues because they

had to recall two products. Their sausage, egg, and cheddar breakfast sandwich and the

fruit bistro box. They were recalled because they posed threats of contamination and

allergens. Starbucks’ P/E ratio in 2017, was 18.43. Starbucks’ P/E ratio in 2018, was 28.47.

The P/E ratio for Starbucks in 2019, is 31.58. The P/E ratio determines the general future

earnings for Starbucks. The P/E ratio for Dunkin’ Donuts in 2017, was 16.57. The P/E ratio

for Dunkin’ Donuts in 2018, was 23.57. The P/E ratio for Dunkin’ Donuts in 2019, is 24.71.

Starbucks is a good company for investors because their profits and stock price are steadily

increasing. The earnings per share (EPS) for its common stock, in 2018, was $2.25. This

compares to the past years because it increased. This compares to their competitors

because Dunkin’ Donuts had an EPS of $2.72, in 2018. The Book Value of Equity per Share

Common Stock is $0.89. This means that if the company was to liquidate, the investors

would receive $0.89 for their Starbucks stock. No, it isn’t sufficient as an investor. This

compares to its competitors because it has a larger Book Value of Equity per Share

Common Stock than Dunkin Donuts.

Evaluation

Yes, I would invest in Starbucks. Yes, I would recommend this company to my classmates.

Starbucks is a good company to invest in because their net income and stock price are

significantly increasing and their operating expenses are decreasing. Starbucks is also in

good condition to expand and grow internationally.

 Sources:

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brandongaille.com/30-curious-starbucks-demographics/.

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