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| Starbucks Corp |(SBUX-NASDAQ) |

|Current Recommendation |Hold |

|Prior Recommendation |Buy |

|Date of Last Change |09/02/2015 |

| | |

|Current Price (09/18/15) |$56.84 |

|Six- Month Target Price | |

OUTLOOK

|Analyst must write |

SUMMARY DATA

|52-Week High |$59.01 |

|52-Week Low |$36.10 |

|One-Year Return (%) |52.39 |

|Beta |0.80 |

|Average Daily Volume (sh) |10,424,866 |

| | |

|Shares Outstanding (mil) |1,484 |

|Market Capitalization ($mil) |$85,401 |

|Short Interest Ratio (days) |1.41 |

|Institutional Ownership (%) |71 |

|Insider Ownership (%) |4 |

| | |

|Annual Cash Dividend |$0.64 |

|Dividend Yield (%) |1.11 |

| | |

|5-Yr. Historical Growth Rates | |

| Sales (%) |11.9 |

| Earnings Per Share (%) |19.6 |

| Dividend (%) |23.8 |

| | |

|P/E using TTM EPS |37.9 |

|P/E using 2015 Estimate |36.0 |

|P/E using 2016 Estimate |30.6 |

| | |

|Zacks Rank |3 |

| | |

|Risk Level |Average, |

|Type of Stock |Large-Growth |

|Industry |Retail-Restrnts |

|Zacks Rank in Industry |21 of 57 |

KEY POINTS

➢ Analyst must write

OVERVIEW

Analyst must write

INDUSTRY OUTLOOK

INDUSTRY OUTLOOK - NEGATIVE

Our outlook for the Food/Drug - Retail/Wholesale industry is negative. This is a diverse industry that includes the following segments: pharmacy/drug distributors, food wholesalers, grocers, and restaurants. Demographic trends, namely an aging and increasingly time-constrained population, have led to lifestyle changes that should continue to be favorable for these sectors for several years. Industry performance was mixed last year. Food and drug companies experienced margin pressure from increasing competition coupled with a slow economy, while restaurant operators benefited from benign commodities pricing coupled with better-than-expected consumer demand in the face of the sluggish economy. However, we expect that trend to moderate in 2004, and we expect industry performance as a whole to lag the overall growth of the economy.

Although the demographics of an aging U.S. population are favorable for the prescription drug industry, the outlook for pharmacies remains clouded due to several influences on the industry. Competition will remain stiff in the pharmacy segment as other retail businesses continue to add pharmacy departments and as other low-cost pharmacy options come on-line. Discount retailers, in particular, have made substantial inroads in gaining market share during the last year. The trend toward generic drugs, while providing better margins for retail pharmacists, is expected to slow over the next year. In addition, various drug re-importation schemes have been proposed by large employers and state and local governments in an effort to manage escalating healthcare costs. Further clouding the outlook is the recent legislation providing drug benefits under Medicare.

The grocery segment, a traditional victim of low margins, is expected to continue to suffer slow sales and earnings growth in 2004. Discounters (led by Wal-Mart) continued to steal market share from traditional grocers last year, demonstrating a recent trend that is not expected to abate in the near future. The traditional grocers seem to be torn between competing on price with the discounters on the one hand and on quality and selection with upscale regional players on the other. Food distributors suffered from the continued weakness of the food retailers. We expect near-term growth through consolidation and a focus on private-label products distributed through retailers targeting lower-income markets - albeit at lower margins.

Demographics are expected to continue to favor the restaurant industry-particularly casual dining-for some time to come, with lifestyle changes supporting the spending of an increasing percentage of our rising incomes on food away from home. However, fierce competition among Quick-Service Restaurants (QSRs) has severely reduced margins and profits. During the second half of 2003, menu innovation seems to have brought customers back to QSR, however, we expect the mature segment of the industry to continue to post slower earnings growth and lower returns on investment than the still-robust casual dining and youthful fast-casual segments of the industry. Low food costs have benefited the entire industry for the last three years, and have helped to offset increases in other expenses, notably insurance costs. However, we are seeing an end to food cost deflation this year, particularly with restrictions on Canadian beef boosting prices for that commodity substantially. Finally, the operating success of restaurants over the last year has increased earnings multiples on their shares, producing less attractive valuations.

INDUSTRY POSITION

Analyst must write

RECENT NEWS

Analyst must write

VALUATION

Analyst must write

RISKS

➢ Analyst must write.

INSIDER TRADING AND OWNERSHIP

Analyst must write.

PROJECTED INCOME STATEMENT & BALANCE SHEET

SBUX 116524.159.413.6

HISTORICAL ZACKS RECOMMENDATIONS

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DISCLOSURES

The following disclosures relate to relationships between Zacks Small-Cap Research (“Zacks SCR”), a division of Zacks Investment Research (“ZIR”), and the issuers covered by the Zacks SCR Analysts in the Small-Cap Universe.

ANALYST DISCLOSURES

I, @AnalystName, CFA, hereby certify that the view expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report. I believe the information used for the creation of this report has been obtained from sources I considered to be reliable, but I can neither guarantee nor represent the completeness or accuracy of the information herewith. Such information and the opinions expressed are subject to change without notice.

INVESMENT BANKING, REFERRALS, AND FEES FOR SERVICE

Zacks SCR does not provide nor has received compensation for investment banking services on the securities covered in this report. Zacks SCR does not expect to receive compensation for investment banking services on the Small-Cap Universe.  Zacks SCR may seek to provide referrals for a fee to investment banks. Zacks & Co., a separate legal entity from ZIR, is, among others, one of these investment banks. Referrals may include securities and issuers noted in this report. Zacks & Co. may have paid referral fees to Zacks SCR related to some of the securities and issuers noted in this report. From time to time, Zacks SCR pays investment banks, including Zacks & Co., a referral fee for research coverage.

Zacks SCR has received compensation for non-investment banking services on the Small-Cap Universe, and expects to receive additional compensation for non-investment banking services on the Small-Cap Universe, paid by issuers of securities covered by Zacks SCR Analysts. Non-investment banking services include investor relations services and software, financial database analysis, advertising services, brokerage services, advisory services, equity research, investment management, non-deal road shows, and attendance fees for conferences sponsored or co-sponsored by Zacks SCR. The fees for these services vary on a per client basis and are subject to the number of services contracted. Fees typically range between ten thousand and fifty thousand USD per annum.

POLICY DISCLOSURES

Zacks SCR Analysts are restricted from holding or trading securities placed on the ZIR, SCR, or Zacks & Co. restricted list, which may include issuers in the Small-Cap Universe. ZIR and Zacks SCR do not make a market in any security nor do they act as dealers in securities. Each Zacks SCR Analyst has full discretion on the rating and price target based on his or her own due diligence. Analysts are paid in part based on the overall profitability of Zacks SCR. Such profitability is derived from a variety of sources and includes payments received from issuers of securities covered by Zacks SCR for services described above. No part of analyst compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in any report or article.

ADDITIONAL INFORMATION

Additional information is available upon request. Zacks SCR reports are based on data obtained from sources we believe to be reliable, but are not guaranteed as to be accurate nor do we purport to be complete. Because of individual objectives, this report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed by Zacks SCR Analysts are subject to change without notice. Reports are not to be construed as an offer or solicitation of an offer to buy or sell the securities herein mentioned. 

ZACKS RATING & RECOMMENDATION

ZIR uses the following rating system for the @UNIV@ companies whose securities it covers, including securities covered by Zacks SCR: Buy/Outperform: The analyst expects that the subject company will outperform the broader U.S. equity market over the next one to two quarters. Hold/Neutral: The analyst expects that the company will perform in line with the broader U.S. equity market over the next one to two quarters. Sell/Underperform: The analyst expects the company will underperform the broader U.S. Equity market over the next one to two quarters.

The current distribution is as follows: Buy/Outperform- @B@%, Hold/Neutral- @H@%, Sell/Underperform – @S@%. Data is as of midnight on the business day immediately prior to this publication.

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Month Day, Year

[pic]Small-Cap Research Sarmistha Roy Chowdhury

312-265-xxxx

email@

scr. 10 S. Riverside Plaza, Chicago, IL 60606

ZACKS ESTIMATES

Revenue

(in millions of $)

| |Q1 |Q2 |Q3 |Q4 |Year |

| |(Dec) |(Mar) |(Jun) |(Sep) |(Sep) |

|2013 |3,800 A |3,556 A |3,742 A |3,795 A |14,892 A |

|2014 |4,240 A |3,874 A |4,154 A |4,181 A |16,448 A |

|2015 |4,803 A |4,564 A |4,881 A |4,962 E |19,210 E |

|2016 |5,344 E |5,026 E |5,395 E | |21,545 E |

Earnings per Share

(EPS is operating earnings before non recurring items)

| |Q1 |Q2 |Q3 |Q4 |Year |

| |(Dec) |(Mar) |(Jun) |(Sep) |(Sep) |

|2013 |$0.28 A |$0.24 A |$0.28 A |$0.30 A |$1.10 A |

|2014 |$0.35 A |$0.28 A |$0.34 A |$0.37 A |$1.33 A |

|2015 |$0.40 A |$0.33 A |$0.42 A |$0.43 E |$1.58 E |

|2016 |$0.47 E |$0.39 E |$0.48 E | |$1.86 E |

|Zacks Projected EPS Growth Rate - Next 5 Years % |20 |

|Consensus Projected EPS Growth - Next 5 Years % |18 |

| Top 5 Public Companies in the industry |

| | | | |

|Ticker |Company |Market Share |Zacks |

|  |  | |Rec |

|CMPGY |Compass Grp Plc |20.07308% |N/A |

|MCD |Mcdonalds Corp |19.48804% |Underperform |

|SBUX |Starbucks Corp |11.68076% |Neutral |

|YUM |Yum! Brands Inc |9.43037% |Neutral |

|DRI |Darden Restrnt |4.46385% |Neutral |

| Starbucks Corp |  |

|Income Statement and Balance Sheet |  |

|(Dollars in millions, except EPS data) |  |

|  | | | | | | | | |

| |09/10 |09/11 |09/12 |09/13 |09/14 |09/15E |

|Sales | |10,707 |11,700 |13,300 |14,892 |16,448 |19,210 |

|  |Cost of Goods Sold |4,459 |4,949 |5,813 |6,382 |6,859 |8,011 |

|  |SG&A |4,319 |4,499 |4,939 |8,214 |5,798 |6,772 |

|  |Other operating expenses |510 |523 |550 |621 |710 |829 |

|  |Interest and other |471 |480 |613 |-334 |1,013 |1,184 |

|Zacks Adjusted Income before NRI |978 |1,169 |1,384 |1,676 |2,030 |2,345 |

|Net Income |946 |1,246 |1,384 |8 |2,068 |2,345 |

|Diluted EPS before NRI |0.64 |0.76 |0.89 |1.10 |1.33 |1.58 |

|Reported EPS |0.62 |0.81 |0.89 |1.13 |1.36 |1.58 |

|  | | | | | | |

|Cash & Marketable Securities |1,450 |2,051 |2,037 |3,234 |1,844 |1,844 |

|Current Assets |2,756 |3,795 |4,200 |5,471 |4,169 |4,169 |

|Current Liabilities |1,779 |2,076 |2,210 |5,377 |3,039 |3,039 |

|Long Term Debt |549 |550 |550 |1,299 |2,048 |2,048 |

|Shareholder's Equity |3,682 |4,387 |5,115 |4,482 |5,274 |7,619 |

Industry Comparables

| |Pr Chg |P/E CurrFY |EPS Gr |Price/ |Price/ |Price/ |

| |YTD | |5Yr Est |Book |Sales |CF |

|STARBUCKS CORP |38.5 |35.9 |17.6 |14.4 |4.6 |30.7 |

| | | | | | | |

|Industry Mean |1.9 |44.0 |17.0 |12.5 |1.7 |27.6 |

|Industry Median |-2.1 |27.2 |16.3 |4.0 |1.5 |14.9 |

|S&P 500 |-4.9 |16.4 | |5.7 |3.4 | |

| | | | | | | |

|MCDONALDS CORP |3.6 |20.6 |7.5 |8.8 |3.5 |13.6 |

|HABIT RESTRNTS |-20.5 |101.7 |26.5 |5.2 | |52.8 |

|YUM! BRANDS INC |10.0 |22.7 |11.5 |21.3 |2.6 |16.4 |

|DARDEN RESTRNT |18.5 |22.1 |12.4 |3.7 |1.3 |13.1 |

| | | | | | | |

SBUX: Zacks Company Report - HOLD

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