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2021-11-26
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Is Starbucks Stock Overvalued Or Undervalued? Take A Long-Term View
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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":877104829,"tweetId":"877104829","gmtCreate":1637894437055,"gmtModify":1637894437369,"author":{"id":3573460795152662,"idStr":"3573460795152662","authorId":3573460795152662,"authorIdStr":"3573460795152662","name":"Timtan85","avatar":"https://static.tigerbbs.com/5ac241a703d94ceba483abb0655d0b6b","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":73,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>Pls like</p></body></html>","htmlText":"<html><head></head><body><p>Pls like</p></body></html>","text":"Pls like","highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":4,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/877104829","repostId":1143141710,"repostType":4,"repost":{"id":"1143141710","pubTimestamp":1637893897,"share":"https://www.laohu8.com/m/news/1143141710?lang=&edition=full","pubTime":"2021-11-26 10:31","market":"us","language":"en","title":"Is Starbucks Stock Overvalued Or Undervalued? Take A Long-Term View","url":"https://stock-news.laohu8.com/highlight/detail?id=1143141710","media":"Seeking Alpha","summary":"Summary\n\nStarbucks has been a compelling growth investment for many years. The company should contin","content":"<p><b>Summary</b></p>\n<ul>\n <li>Starbucks has been a compelling growth investment for many years. The company should continue to deliver solid growth rates in the future.</li>\n <li>SBUX's outlook for 2022 did not meet market expectations, and higher labor costs and higher coffee prices could pressure margins in the near term.</li>\n <li>Shares are not especially expensive, however, and SBUX should deliver solid returns in the coming years.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0e006d80bb64b4caeaf652728d6d7810\" tg-width=\"1536\" tg-height=\"864\" width=\"100%\" height=\"auto\"><span>martinrlee/iStock Editorial via Getty Images</span></p>\n<p><b>Article Thesis</b></p>\n<p>Starbucks Corporation (SBUX) is a leading global restaurant chain that has delivered compelling business growth for many years. In 2021, its shares have underperformed the broader market, as investors have not reacted very well to conservative guidance for 2022, while labor and supply chain headwinds are seen as potential issues as well. Nevertheless, I do believe that Starbucks Corporation will be able to deliver attractive business growth in the long run, and the current valuation doesn't look overly high, but it doesn't look especially low either.</p>\n<p><b>Starbucks Stock Price</b></p>\n<p>Today, Starbucks Corporation is trading at $114 per share. This is about 10% lower than the 52-week high of $126, and about 20% higher than the company's $96 52-week low. Compared to the broad market, Starbucks Corporation has underperformed this year:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/78400e2d9a077129cb0b1d4635afa736\" tg-width=\"635\" tg-height=\"433\" width=\"100%\" height=\"auto\"><span>Data by YCharts</span></p>\n<p>The company performed relatively in line with the broad market through July, but since then, market enthusiasm for SBUX has seemingly waned, and the company has been moving sideways or down over the last couple of months, while the broader market has rallied to new all-time highs in the same time frame. This has, of course, made SBUX more attractive on a relative basis from a valuation perspective, as its shares have not gotten more expensive in the recent past. Analysts believe that SBUX is moderately underpriced today, as the consensus price target of $122 implies a high-single-digit upside potential over the next twelve months.</p>\n<p><b>Starbucks Has Attractive Growth Opportunities</b></p>\n<p>Starbucks Corporation has been seen as a higher-growth restaurant player for many years, and rightfully so. Through opening new properties around the globe, the company has grown its footprint meaningfully over the years, while comparable sales growth has been a highly important factor for the company's business growth as well.</p>\n<p>Starbucks' customers are not very price-sensitive, which is why price increases could be pushed through without any major negative consequences in the past. At the same time, Starbucks Corporation has, with its app and loyalty program, managed to enhance the loyalty of its customers over the years, thereby \"locking in\" many consumers into its ecosystem. Since Starbucks' products remain highly sought-after, and with Starbucks scoring well among the favorite brands of Generation Z and Millenials, it looks like Starbucks will be able to capture an attractive, and possibly growing, market share in the future, too -- at least as long as its brand remains strong and as long as the company remains well-connected to its customers base.</p>\n<p>Comparable store sales growth has also remained healthy during the pandemic -- during the fourth quarter of the current year, SBUX managed to grow its comps sales by 17%, and by a very strong 22% in the US. Starbucks has been a compelling growth investment for many years. The company should continue to deliver solid growth rates in the future. If the company can keep this growth rate in place, while combining it with additional store openings, there should be little concern that Starbucks' revenue growth will flat-line in the foreseeable future. Starbucks has a store count of around 33,000 today, which is significantly below the store count of McDonald's (MCD), at 39,000. Since grabbing a coffee on the go is easier than grabbing a burger, and since more people seem to have health concerns when it comes to McDonald's offerings compared to those of Starbucks, it seems possible that Starbucks' store count will eventually surpass that of McDonald's. In the long run, significant business growth opportunities do thus exist for Starbucks, not only through comps sales growth but also through the expansion of its store count.</p>\n<p>Management states (page 7) that these factors will be key growth drivers in the future, too:</p>\n<blockquote>\n <i>The company's financial results and long-term growth model will continue to be driven by new store openings, comparable store sales and operating margin management. These key operating metrics are important indicators for the growth of the business and the effectiveness of the company's marketing and operational strategies.</i>\n</blockquote>\n<p>When it comes to Starbucks Corporation's future earnings per share growth rate, which is one of the most important metrics for shareholders, another impactful item is the change in the company's share count. Starbucks has regularly been repurchasing its common stock for many years:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/fcd9d5e7a53c0bd09a0463e6ff1c9969\" tg-width=\"635\" tg-height=\"417\" width=\"100%\" height=\"auto\"><span>Data by YCharts</span></p>\n<p>The company plans to do the same going forward, as Starbucks has recently committed to a new $20 billion shareholder return plan over the next three years. This will include both dividends and share repurchases, but with the dividend costing the company just $2 billion a year, or $6 billion over three years, it seems pretty clear that management will focus on share repurchases. $14 billion in buybacks in fiscal 2022 to fiscal 2024 would equate to 11% of the company's shares being bought back in that time frame (at current prices), or close to 4% a year. This alone will result in mid-single-digit earnings per share growth, even if Starbucks would not grow its company-wide profits at all. Since profit growth can be expected, however, it is not a large surprise to see that analysts are forecasting attractive earnings per share growth in the coming years:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c4e3bee4cf6829afa81e93314e9f4703\" tg-width=\"640\" tg-height=\"130\" width=\"100%\" height=\"auto\"><span>Source: Seeking Alpha</span></p>\n<p>Starbucks is forecasted to grow its earnings per share at a mid-teens rate in 2023 and 2024, following a solid, but not spectacular 6% increase during the current fiscal year. Beyond 2024, analyst estimates for SBUX's earnings per share growth are high as well, but due to a lower number of analysts having published estimates for those years, these estimates might be less precise.</p>\n<p><b>Is Starbucks Stock Overvalued?</b></p>\n<p>At 33x this year's earnings, Starbucks is not an inexpensive stock. On the other hand, we should also consider the company's growth track record, its compelling long-term growth potential, and its shareholder-friendly capital return policy. Factoring in these items, and considering that SBUX has a history of beating estimates (EPS came in ahead of expectations in eight out of the last eight quarters), which means that current EPS estimates might be too low, which would effectively mean that the actual valuation is lower, Starbucks does not look overpriced, I believe.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/cc87daeca8809cd26ce7335c4ae81193\" tg-width=\"635\" tg-height=\"433\" width=\"100%\" height=\"auto\"><span>Data by YCharts</span></p>\n<p>Starbucks' current earnings multiple, based on forecasts for the current year, is relatively in-line with how SBUX was valued in the past. I thus do believe that Starbucks is neither meaningfully overvalued nor meaningfully undervalued at current prices. Instead, it looks like SBUX is relatively fairly valued today, basically comparable to how the company's shares were valued in the past.</p>\n<p><b>Is SBUX Stock A Buy, Sell, Or Hold?</b></p>\n<p>Following the Q4 earnings release, shares dipped to just above $100 per share -- in retrospect, that would have been a nice time to add shares. Unfortunately, this dip did not last very long, and SBUX quickly rose above $110 again. At the current price, SBUX seems relatively fairly valued. With the pandemic hopefully coming to an end in 2022, further reopening efforts could result in considerable business growth for Starbucks. At the same time, however, higher input costs due to bad weather in Brazil, which has led to higher coffee prices, could put some pressure on SBUX's margins in the near term. Higher labor expenses -- SBUX has decided to hike pay to at least $17 per hour next year -- also could result in margin headwinds.</p>\n<p>Overall, there are thus positives and negatives in the foreseeable future. When we also account for the fact that SBUX is neither trading at a historically expensive valuation, nor at a historically low valuation, it looks to me like Starbucks is a very solid <b><i>Hold</i></b> at slightly above $110. Shares are not inexpensive enough to make them an outright buy right here, but shares are also, by far, not expensive enough to justify selling in order to lock in gains.</p>\n<p>From the current level, Starbucks should generate solid, but not necessarily overly attractive total returns over the coming years. If Starbucks dips to the $100 area again, I would be inclined to enter a position in that price range.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Starbucks Stock Overvalued Or Undervalued? Take A Long-Term View</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Starbucks Stock Overvalued Or Undervalued? Take A Long-Term View\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-26 10:31 GMT+8 <a href=https://seekingalpha.com/article/4471847-starbucks-stock-overvalued-undervalued><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nStarbucks has been a compelling growth investment for many years. The company should continue to deliver solid growth rates in the future.\nSBUX's outlook for 2022 did not meet market ...</p>\n\n<a href=\"https://seekingalpha.com/article/4471847-starbucks-stock-overvalued-undervalued\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SBUX":"星巴克"},"source_url":"https://seekingalpha.com/article/4471847-starbucks-stock-overvalued-undervalued","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1143141710","content_text":"Summary\n\nStarbucks has been a compelling growth investment for many years. The company should continue to deliver solid growth rates in the future.\nSBUX's outlook for 2022 did not meet market expectations, and higher labor costs and higher coffee prices could pressure margins in the near term.\nShares are not especially expensive, however, and SBUX should deliver solid returns in the coming years.\n\nmartinrlee/iStock Editorial via Getty Images\nArticle Thesis\nStarbucks Corporation (SBUX) is a leading global restaurant chain that has delivered compelling business growth for many years. In 2021, its shares have underperformed the broader market, as investors have not reacted very well to conservative guidance for 2022, while labor and supply chain headwinds are seen as potential issues as well. Nevertheless, I do believe that Starbucks Corporation will be able to deliver attractive business growth in the long run, and the current valuation doesn't look overly high, but it doesn't look especially low either.\nStarbucks Stock Price\nToday, Starbucks Corporation is trading at $114 per share. This is about 10% lower than the 52-week high of $126, and about 20% higher than the company's $96 52-week low. Compared to the broad market, Starbucks Corporation has underperformed this year:\nData by YCharts\nThe company performed relatively in line with the broad market through July, but since then, market enthusiasm for SBUX has seemingly waned, and the company has been moving sideways or down over the last couple of months, while the broader market has rallied to new all-time highs in the same time frame. This has, of course, made SBUX more attractive on a relative basis from a valuation perspective, as its shares have not gotten more expensive in the recent past. Analysts believe that SBUX is moderately underpriced today, as the consensus price target of $122 implies a high-single-digit upside potential over the next twelve months.\nStarbucks Has Attractive Growth Opportunities\nStarbucks Corporation has been seen as a higher-growth restaurant player for many years, and rightfully so. Through opening new properties around the globe, the company has grown its footprint meaningfully over the years, while comparable sales growth has been a highly important factor for the company's business growth as well.\nStarbucks' customers are not very price-sensitive, which is why price increases could be pushed through without any major negative consequences in the past. At the same time, Starbucks Corporation has, with its app and loyalty program, managed to enhance the loyalty of its customers over the years, thereby \"locking in\" many consumers into its ecosystem. Since Starbucks' products remain highly sought-after, and with Starbucks scoring well among the favorite brands of Generation Z and Millenials, it looks like Starbucks will be able to capture an attractive, and possibly growing, market share in the future, too -- at least as long as its brand remains strong and as long as the company remains well-connected to its customers base.\nComparable store sales growth has also remained healthy during the pandemic -- during the fourth quarter of the current year, SBUX managed to grow its comps sales by 17%, and by a very strong 22% in the US. Starbucks has been a compelling growth investment for many years. The company should continue to deliver solid growth rates in the future. If the company can keep this growth rate in place, while combining it with additional store openings, there should be little concern that Starbucks' revenue growth will flat-line in the foreseeable future. Starbucks has a store count of around 33,000 today, which is significantly below the store count of McDonald's (MCD), at 39,000. Since grabbing a coffee on the go is easier than grabbing a burger, and since more people seem to have health concerns when it comes to McDonald's offerings compared to those of Starbucks, it seems possible that Starbucks' store count will eventually surpass that of McDonald's. In the long run, significant business growth opportunities do thus exist for Starbucks, not only through comps sales growth but also through the expansion of its store count.\nManagement states (page 7) that these factors will be key growth drivers in the future, too:\n\nThe company's financial results and long-term growth model will continue to be driven by new store openings, comparable store sales and operating margin management. These key operating metrics are important indicators for the growth of the business and the effectiveness of the company's marketing and operational strategies.\n\nWhen it comes to Starbucks Corporation's future earnings per share growth rate, which is one of the most important metrics for shareholders, another impactful item is the change in the company's share count. Starbucks has regularly been repurchasing its common stock for many years:\nData by YCharts\nThe company plans to do the same going forward, as Starbucks has recently committed to a new $20 billion shareholder return plan over the next three years. This will include both dividends and share repurchases, but with the dividend costing the company just $2 billion a year, or $6 billion over three years, it seems pretty clear that management will focus on share repurchases. $14 billion in buybacks in fiscal 2022 to fiscal 2024 would equate to 11% of the company's shares being bought back in that time frame (at current prices), or close to 4% a year. This alone will result in mid-single-digit earnings per share growth, even if Starbucks would not grow its company-wide profits at all. Since profit growth can be expected, however, it is not a large surprise to see that analysts are forecasting attractive earnings per share growth in the coming years:\nSource: Seeking Alpha\nStarbucks is forecasted to grow its earnings per share at a mid-teens rate in 2023 and 2024, following a solid, but not spectacular 6% increase during the current fiscal year. Beyond 2024, analyst estimates for SBUX's earnings per share growth are high as well, but due to a lower number of analysts having published estimates for those years, these estimates might be less precise.\nIs Starbucks Stock Overvalued?\nAt 33x this year's earnings, Starbucks is not an inexpensive stock. On the other hand, we should also consider the company's growth track record, its compelling long-term growth potential, and its shareholder-friendly capital return policy. Factoring in these items, and considering that SBUX has a history of beating estimates (EPS came in ahead of expectations in eight out of the last eight quarters), which means that current EPS estimates might be too low, which would effectively mean that the actual valuation is lower, Starbucks does not look overpriced, I believe.\nData by YCharts\nStarbucks' current earnings multiple, based on forecasts for the current year, is relatively in-line with how SBUX was valued in the past. I thus do believe that Starbucks is neither meaningfully overvalued nor meaningfully undervalued at current prices. Instead, it looks like SBUX is relatively fairly valued today, basically comparable to how the company's shares were valued in the past.\nIs SBUX Stock A Buy, Sell, Or Hold?\nFollowing the Q4 earnings release, shares dipped to just above $100 per share -- in retrospect, that would have been a nice time to add shares. Unfortunately, this dip did not last very long, and SBUX quickly rose above $110 again. At the current price, SBUX seems relatively fairly valued. With the pandemic hopefully coming to an end in 2022, further reopening efforts could result in considerable business growth for Starbucks. At the same time, however, higher input costs due to bad weather in Brazil, which has led to higher coffee prices, could put some pressure on SBUX's margins in the near term. Higher labor expenses -- SBUX has decided to hike pay to at least $17 per hour next year -- also could result in margin headwinds.\nOverall, there are thus positives and negatives in the foreseeable future. When we also account for the fact that SBUX is neither trading at a historically expensive valuation, nor at a historically low valuation, it looks to me like Starbucks is a very solid Hold at slightly above $110. Shares are not inexpensive enough to make them an outright buy right here, but shares are also, by far, not expensive enough to justify selling in order to lock in gains.\nFrom the current level, Starbucks should generate solid, but not necessarily overly attractive total returns over the coming years. If Starbucks dips to the $100 area again, I would be inclined to enter a position in that price range.","news_type":1},"isVote":1,"tweetType":1,"viewCount":83,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":7,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/877104829"}
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