This report will present a financial analysis of Starbucks Corporation (SBUX). A full breakdown of the companies’ profile and ratio analysis will be provided and methods for improvements will also be provided. A full stock analysis will be included to anticipate Starbucks risks versus their returns on common stock and an estimation of the companies’ fundamental value. This report will also delve into the corporate governance of Starbucks as well as discuss the corporations’ corporate policies. By the end of this report a clear understanding of Starbucks Corporation and various brands under the monikers full financial status so that sound and viable investments decisions ...view middle of the document...
2013 trailed 2012 in quick, current, debt ratio, profit margin, return on asset, return on equity, and earnings per share. Despite being down to the previous year in so many categories the company continued to have more revenue than the previous years. However there is a reason as to why the sharp decrease in the loss in ratios;
“Arbitration concluded on litigation with Kraft Foods Global, Inc. ("Kraft") on November 12, 2013, which resulted in a pretax charge to fiscal 2013 operating results of $2.8 billion. This charge reduced EPS by $2.25 per share in fiscal 2013.
Starbucks and Kraft had a contractual obligation in place that Starbucks decided to terminate three years earlier than stipulated. Based on the rules of their binding arbitration they were not allowed to appeal the ruling. At the time Starbucks had adequate liquidity with cash on hand and borrowing power to fund the payment, which went down as a charge to its fiscal 2013 operating expenses. In the same year revenues increased by twelve percent, and Starbucks also opened a net eight hundred and thirty new locations, with the majority of the focus on expanding into the Asian Pacific region. Based on the companies information if it were not for the loss in arbitration to Kraft foods Starbucks would have continued to sustain there growth and would have had an improvement over the previous years various ratios instead of a decrease. In 2014 Starbucks overall numbers should see an improvement, due to its resolved legal issue and expansion. Refer to appendix Table 1 for ratios.
Starbucks Corporation currently has 748.30 million shares of common stock outstanding. Table two showcases the monthly return of Starbucks. Starbucks average monthly return for the previous five years is two point nine percent, with a standard deviation of six point three four percent, and with a personally calculated beta of point eighty. The corporation offered an average monthly return over twice that of the S&P 500, however the company’s volatility was over the indexes as well over the same period of time the S&P 500’s average monthly return was one point one four with a standard deviation of four point zero five percent. The beta given for Starbucks in key statistics is point nine four. The difference in betas could be because the time frame chosen for the calculated beta given in key statistics is unknown, another unknown factor could be the method used to calculate beta or the index that was used to determine the beta. Based upon the beta the overall risk of Starbucks is low making them a relatively safe investment. The analysis growth rate for the next five years is estimated to be seventeen point eight seven percent, which is ahead of the industry, estimated sixteen point eight three percent, and market return of nine point eight percent. With the resolved legal troubles of Starbucks and their increasing presence in the Asian market I fell as though Starbucks five-year...