Starbucks stock may not be on the rise?


[Updated 11/20/2020] Starbucks Update

Having gained more than 73% since the low in March, Starbucks stock (NASDAQ: SBUX) is close to its short-term potential. Our conclusion is based on a detailed comparison of how SBUX performed against the S&P 500 now as well as during the 2008 downturn in our interactive dashboard analysis, Comparison of the 2007-08 and 2020 crises: How has Starbucks’ stock price compared to the S&P 500?

Due to the Covid-19 crisis, Starbucks, an American multinational coffeehouse chain, saw its revenues drop in fiscal 2020 (end of September 2020). In fiscal 2020, Starbucks reported a beaten profit with EPS of $ 0.79 and total revenue of $ 23.5 billion, down 11% year-on-year. In addition, the company reported $ 1.6 billion in cash flow from operating activities for the year.

We are waiting Starbucks revenue to recover after a year affected by Covid and grow 21% to $ 28.5 billion in fiscal 2021. Additionally, its net profit is expected to rebound to $ 3.7 billion in fiscal 2021, with EPS forecast at $ 3.17, which, coupled with the P / E multiple of 32.3x will lead to a Starbucks Rating about $ 102.

[Updated 03/25/2020] Will Starbucks Stock Rebound 50% After Coronovirus?

Starbucks (NASDAQ: SBUX) shares fell from around $ 75 on March 6 to $ 65 yesterday March 24 – a 14% drop (compared to an 18% drop in the S&P 500 during the same period). The World Health Organization declared a global health emergency in late January in light of the spread of the coronavirus. SBUX stock was down 23% from its above $ 84 closing price on Friday, Jan.31 (vs. a roughly 27% drop in the S&P 500).

Looking back at the 2008 financial crisis, we see that SBUX shares have fallen from around $ 11 in October 2007 (the pre-crisis peak) to less than $ 4 in March 2009 (as markets hit a low. trough) – implying that SBUX stock has lost up to 65% of its approximate pre-crisis peak. This marked a higher drop than the larger S&P, which fell almost 51%. However, SBUX recovered sharply from the 2008 crisis, reaching levels of nearly $ 10 in early 2010, up 152% between March 2009 and January 2010. In comparison, the S&P rebounded by around 48% over the same period.

Will Starbucks inventory recover in the same way after the spread of the coronavirus? We compare Starbucks ‘performance against the S&P 500 in our interactive dashboard analysis,’Comparison of the Crisis Between 2007-08 and 2020: How does Starbucks’ share price compare to the S&P 500? And with the 23% drop in mind this time around, a 50% rise in stock prices is definitely on the agenda once fears surrounding the current outbreak have subsided.

On Monday March 9, the stock market entered a phase of extreme volatility, with two major sell-offs on Monday and Thursday separated by days of partial recoveries. Overall, two distinct trends were behind the recent liquidation. First, the growing number of coronavirus cases outside of China is raising concerns about a global economic slowdown. Second, crude oil prices fell more than 20% after Saudi Arabia’s production increased.

SBUX stock has suffered as states and countries are stranded. People do not meet friends and colleagues or go out with family for breakfast, drinks, lunch or dinner. Restaurants and food stores operate on take-out only, and many are closed. In addition to declining demand, the supply chain across the world is suffering, which will also weigh on sales. We believe Starbucks’ Q2 and Q3 results will confirm this reality with lower revenues both internationally and in the Americas.

Actual recovery and its timing depend on wider containment of the spread of the coronavirus. Our dashboard Trends in Covid-19 cases in the United States provides insight into the spread of the pandemic in the United States and contrasts with trends in Brazil and Russia. As investors focus on 2021 results, valuations become important for finding value

What if you are looking for a more balanced portfolio instead? here is a high quality wallet to beat the market, with a return of over 100% since 2016, compared to 55% for the S&P 500. Comprised of companies with strong revenue growth, strong earnings, plenty of liquidity and low risk, it has outperformed the market in its together year after year, consistently.

See everything Trefis price estimates and Download Trefis data here

What is behind Trefis? Find out how it fuels a new collaboration and why Finance directors and finance teams | Product, R&D and marketing teams