EURUNI Financial Markets: Starbucks Stock Price Analysis and Report

This report provides an in-depth analysis of Starbucks (SBUX) stock, examining its performance in the financial markets. It begins with a company overview, highlighting Starbucks' global presence and listing on the NASDAQ. The analysis includes graphical representations of stock price trends from November 2019 to February 2020, noting a positive trend followed by a decline after the COVID-19 outbreak. The report assesses stock risk and return, revealing a negative return and associated standard deviation. It explores changes in stock prices, linking them to recent market events and quarterly earnings. The report discusses the company's short-term and long-term trends, including the impact of China's public health concerns and JP Morgan's stock review. Furthermore, it analyzes technological innovations and financial performance, including operating margins and return on investment. The report concludes with a "Buy" recommendation, considering the company's business operations and future prospects. References from various financial sources are included to support the analysis.

Financial Markets
Starbuck Coffee Stock Analysis

Company Overview
• Starbucks an American Coffee Company and operates a range of
retail coffeehouse chain.
• The company was founded in Seattle, Washington in the year
1971 and the company is currently having more than 30,000
stores that are located on a worldwide basis.
• The company is listed in the NASDAQ Stock Exchange with its
ticker symbol as SBUX. The company serves a range of cold and
hot beverages, whole bean coffee, micro-ground instant coffee,
which is referred as VIA, espresso, caffe latte and various other
beverages.
•

Graphical Representation of Stock
Price
• The share price trend of the company has shown a positive
increase from the time period of 1st November 2019 to
around 22nd January 2020 (Yahoo Finance 2020).
• However, it is important after the Outbreak of Coronavirus
that is after 22nd January 2020, the stock price of the
company has seen a downward trend and this has
impacted the stock price of the company significantly
(Stoffel 2020).

Graphical Representation of Stock
Price
11/1/2019
11/6/2019
11/11/2019
11/16/2019
11/21/2019
11/26/2019
12/1/2019
12/6/2019
12/11/2019
12/16/2019
12/21/2019
12/26/2019
12/31/2019
1/5/2020
1/10/2020
1/15/2020
1/20/2020
1/25/2020
1/30/2020
2/4/2020
2/9/2020
2/14/2020
2/19/2020
2/24/2020
70.00
75.00
80.00
85.00
90.00
95.00
SBUX Share Price

Stock Risk and Return
• Risk and Return are also some of the important concepts
and metrics which plays a predominant role in the overall
analysis and the same has been well considered by us.
• The share price of the company on an overall note in the
trend period evaluated has generated a negative return of
about 0.03% and the associated risk for the company is
measured in the form of standard deviation for the
company was around 1.21%.

Changes in Stock Prices
• The changes in the stock price of the company has been
primarily because of the fact that the Starbucks Company
has seen its stock price show a bit of fall in its recent
weeks. Since, the Mid-January, the shares of the company
are down almost by 6% till February 6, 2020.
• The share price have shown a bit recovery after 7th
February 2020, but at the same time it is important to note
that the current share price are considerably around 11%
below from all-time high stock price of the company
(Diversity and Diversity 2020).

Trend of Starbucks
• An increase of 12.64% in the share price of the company
from the period 1st November 2019 to around 22nd January
2020.
• The key reason behind the increase in the share price of
the company has been primarily because of the positive
financial performance shown by the company and increase
of business operations primarily in the field of increasing
sales of retail chain globally.

Short Term Trend (1st February to
26th February 2020)
• Quarterly Earnings: On 28th of January 2020 the company
came out with its quarterly earnings of $0.79 on a per
share basis which has been able to well beta the Estimate
of Zacks which has been around $0.79 per share.

Short Term Trend (1st February to
26th February 2020)
• China’ Public Health Concern: The stock price of the
company showed a negative trend of about 9.51% or a
falloff about $8.92 in the share price of the company from
the trend period of 23rd January 2020 to 31st January 2020.

Long Term Trend (1st November to
26th February 2020).
• JP Morgan Stock Review: It is important to note that with
the innovation pace and the growth rate associated with
the business operations of company in China and US is
increasing at a continuous and at a much faster rate which
has allowed it to well expand its retail chains. The target
price that was set up by the JP Morgan Analyst was around
$94 which was quite high from the current stock price of
$86.59 for the company as on 12th December 2020. The
stock price soon after the news price did show a positive
price boost for the share price after the release of news.

Long Term Trend (1st November to
26th February 2020).
• JP Morgan Stock Review: It is important to note that with
the innovation pace and the growth rate associated with
the business operations of company in China and US is
increasing at a continuous and at a much faster rate which
has allowed it to well expand its retail chains. The target
price that was set up by the JP Morgan Analyst was around
$94 which was quite high from the current stock price of
$86.59 for the company as on 12th December 2020. The
stock price soon after the news price did show a positive
price boost for the share price after the release of news.

Long Term Trend (1st November to
26th February 2020).
• Technological Innovation: The company collected
important data points was collected from the customers
while using the application of Starbucks and from the
feedback form they would be receiving. The primarily field
of data collections would be in the field of knowledge of
Starbucks Company operating in their area, local popular
set of drinks, weather and other factors which would help
the company better understand the consumer preferences,
needs and market on an overall basis.

Financial Performance
• The operating margin of the company has changed slightly
for the company and these have been primarily in the field
of reported segments of the company:

Strong Financials and Return on
Investment
• The company has well applied its low cost capital to well
leverage its growth that have given them a considerable
amount of capital returns when compared with other peers
as shown below:

Stock Valuation and Volatility
• The valuation of the stock when compared in terms of the
Price to Earnings Multiple of the company is currently high
whereby the company is currently having a P/E ratio of
greater than 26.34 times currently.
• Series of market related and business related factors which
both influenced the stock price of the company on a
positive as well as on a negative scale were well written
down.

Recommendation
• The business operations of the company has been positive
considering the range of business activities, operations and
performance it has delivered.
• From the view point of investment a “Buy”
recommendation would be assigned to the stock given the
scale of business operations and future prospects of the
company which is expected to significantly increase with
the increase in demand and development of its operational
capacity.

References
• Saibil, J. 2019 Can Investing in Artificial Intelligence Increase Starbucks Sales? | The Motley Fool, The Motley Fool. Available at:
https://www.fool.com/investing/2019/12/04/investing-artificial-intelligence-boost-starbucks.aspx (Accessed: 27 February 2020).
• Keown, C. 2020 Starbucks Stock Rises on Upgrade from JPMorgan, Barrons.com. Available at: https://www.barrons.com/articles/starbucks-stock-rises-on-
upgrade-from-jpmorgan-51576158393 (Accessed: 27 February 2020).
• Stoffel, B. 2020 Why I (Still) Don't Want to Own Starbucks Stock...and You Shouldn't Either | The Motley Fool, The Motley Fool. Available at:
https://www.fool.com/investing/2020/01/25/why-i-still-dont-want-to-own-starbucks-stock.aspx (Accessed: 27 February 2020).
• Wang, P. 2019 3 Reasons Starbucks Stock Is a Buy Ahead of Earnings | The Motley Fool, The Motley Fool. Available at:
https://www.fool.com/investing/2019/10/22/3-reasons-starbucks-stock-is-a-buy-ahead-of-earnin.aspx (Accessed: 27 February 2020).
• About See All About Our People Careers Press Center Contact Quick Links Nasdaq Marketsite Investor Relations Diversity, I., Quick Links Nasdaq Marketsite
Investor Relations Diversity, I. and Diversity, I. 2020 Starbucks (SBUX) Q1 Earnings Beat Estimates, Nasdaq.com. Available at:
https://www.nasdaq.com/articles/starbucks-sbux-q1-earnings-beat-estimates-2020-01-28 (Accessed: 27 February 2020).
• Yahoo Finance 2020. Available at: https://in.finance.yahoo.com/quote/SBUX/history?
period1=1572566400&period2=1582761600&interval=1d&filter=history&frequency=1d (Accessed: 27 February 2020).
• Hall, J. 2020 Forget Coronavirus: These 3 Starbucks Metrics Matter More | The Motley Fool, The Motley Fool. Available at:
https://www.fool.com/investing/2020/02/08/forget-coronavirus-these-3-starbucks-metrics-matte.aspx (Accessed: 27 February 2020).

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