Reviewing Starbucks (SBUX) & The Competition

Starbucks (NASDAQ:SBUX) is one of 383 public companies in the “Hotels, Restaurants & Leisure” industry, but how does it weigh in compared to its peers? We will compare Starbucks to related businesses based on the strength of its profitability, valuation, institutional ownership, earnings, dividends, risk and analyst recommendations.

Risk and Volatility

Starbucks has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, Starbucks’ peers have a beta of 1.44, indicating that their average stock price is 44% more volatile than the S&P 500.

Valuation and Earnings

This table compares Starbucks and its peers revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Starbucks	$37.91 billion	$2.53 billion	48.42
Starbucks Competitors	$3.42 billion	$250.18 million	-160.57

Starbucks has higher revenue and earnings than its peers. Starbucks is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Recommendations

This is a summary of current recommendations and price targets for Starbucks and its peers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Starbucks	4	15	21	0	2.42
Starbucks Competitors	3835	17324	25643	908	2.50

Starbucks presently has a consensus price target of $108.83, indicating a potential upside of 1.70%. As a group, “Hotels, Restaurants & Leisure” companies have a potential upside of 53.21%. Given Starbucks’ peers stronger consensus rating and higher possible upside, analysts plainly believe Starbucks has less favorable growth aspects than its peers.

Profitability

This table compares Starbucks and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Starbucks	6.66%	-38.61%	10.40%
Starbucks Competitors	8.51%	-42.06%	2.05%

Insider and Institutional Ownership

72.3% of Starbucks shares are owned by institutional investors. Comparatively, 48.6% of shares of all “Hotels, Restaurants & Leisure” companies are owned by institutional investors. 0.0% of Starbucks shares are owned by insiders. Comparatively, 22.0% of shares of all “Hotels, Restaurants & Leisure” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Starbucks pays an annual dividend of $2.48 per share and has a dividend yield of 2.3%. Starbucks pays out 112.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Hotels, Restaurants & Leisure” companies pay a dividend yield of 3.2% and pay out 38.9% of their earnings in the form of a dividend. Starbucks has increased its dividend for 15 consecutive years. Starbucks lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Summary

Starbucks peers beat Starbucks on 9 of the 15 factors compared.

Starbucks Company Profile

Starbucks Corporation is a global coffee company that roasts, markets and sells coffee and other beverages, along with food and related merchandise. Its offerings include brewed coffee, espresso-based drinks, teas and packaged coffee products. The company serves customers through company-operated and licensed stores, as well as through retail and food-service partnerships. Its stores also sell items such as mugs and coffee-making equipment. Founded in Seattle in 1971, Starbucks operates in North America and international markets, including China.