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Starbucks (SBUX) grows during a Pandemic

Starbucks (SBUX) is experiencing impressive levels of growth during a pandemic. For instance, Starbucks quarterly revenues grew by $1.981 billion in the quarter ending on September 30, 2020.

To elaborate, Starbucks reported quarterly revenues of $4.222 billion on June 30, 2020, and quarterly revenues of $6.203 billion on September 30, 2020. However, in 2020, Starbucks’ quarterly revenues shrank from $7.097 billion on 31 December 2020.

Moreover, Starbucks’ quarterly gross profit grew from $2.738 billion on 30 June 2020 to $4.226 billion on 30 September 2020. Impressively, Starbucks’ quarterly operating income grew from -$703.90 million on 30 June 2020 to $558.4 million on 30 September 2020.

Conversely, Starbucks’ operating income shrank from $1.220 billion on 31 December 2020. Hence, Starbucks revenue growth is enormous.

Is Starbucks (SBUX) growing?

Conversely, Starbucks revenue growth rate has shrank for three quarters.

Stockrow estimates Starbucks had a negative revenue growth rate of -4.92% in the quarter ending on 31 March 2020, for example. That revenue growth rate fell to -38.12% in the quarter ending on 30 June 2020 and grew to -8.05% on 30 September 2020.

Consequently, I think Starbucks’ growth is regaining the ground it lost during the Great Covid Pandemic of 2020. That makes Starbucks a good stock because it rebounds fast.

Additionally, I think the revenue growth shows that there is still a high demand for Starbucks’ products; coffee, sandwiches, lattes, ice tea, etc. Thus, Starbucks could be a COVID proof stock which is an interesting development.

Is Starbucks a Cash-Rich Company?

Starbucks (SBUX) could be a cash rich company because it reported a $1.491 billion quarterly operating cash flow on 30 September 2020.

The quarterly operating cash flow rose from -$368 million on 30 June 2020 and -$1.361 billion on 31 March 2020. Interestingly, Starbucks began 2020 with a quarterly operating cash of $1.836 billion on 31 December 2019.

Starbucks reported a quarterly ending cash flow of $385 million on 30 September 2020. The quarterly ending cash flow fell from $1.394 billion on June 2020 and rose from -$1.361 billion on 31 March 2020. Starbucks began 2020 with a quarterly operating cash flow of $1.836 billion on 31 December 2019.

Starbucks has Enormous Amounts of Cash

The Starbucks Corporation (NASDAQ: SBUX) had $4.632 billion in cash and short-term investments on 30 September 2020. In 2020, Starbucks cash and short-term investments rose from $5.90 billion on 31 December 2019.

Moreover, Starbucks can generate enormous amounts of cash from financing. Starbucks reported $2.343 billion in cash from financing on 30 June 2020 and $1.273 billion in cash from financing on 31 March 2020.

Notably, Starbucks can pay off enormous amounts of debt, it reported quarterly financing cash flows of -$779.70 million on 30 September 2020 and -$1.123 billion on 31 December 2019.

Thus, Starbucks can generate enormous amounts of cash and issue enormous amounts of debt. Thus, I think Starbucks is a cash-rich company.

What Value Does Starbucks Have?

Starbucks (SBUX) offers enormous value with its massive footprint and one of the world’s successful and recognizable brands.

For example, Statista estimates Starbucks (SBUX) had 31,256 stores worldwide in 2019. In addition, Statista estimates Starbucks had 15,041 stores in the United States in 2019.

Moreover, Starbucks is the first word that many people remember when they think of coffee. Starbucks is a valuable brand, because its management dominates opinion in a segment of the population.

One way Starbucks retains its reputation is by using licensing instead of franchising. For instance, Entrepreneur reports Starbucks does not sell franchises, instead Starbucks sells licenses that allow companies to use its brand.

By licensing Starbucks retains control of the brand. To explain, Starbucks can take a license away fast.

Furthermore, licensing enables Starbucks to leverage other companies’ resources. When Starbucks licenses stores in Kroger (KR) supermarkets and Target (TGT) supercenters, Starbucks makes money from Kroger and Target’s advertising and stores. Starbucks’ management has learned how to make money from other retailers’ customers.

Starbucks is a Value Investment

I consider Starbucks (SBUX) a value investment because Mr. Market fairly priced it at $102.32 on 22 December 2020.

 

In addition, Starbucks share value grew in 2020. Mr. Market paid $89.35 for Starbucks on 2 January 2020 and $103.28 on 18 December 2020 and $102.32 on 22 December 2020. Thus, Starbucks is a company that experiences both revenue and share price growth.

Plus, Starbucks is a great dividend stock. Starbucks shares paid a 45¢ quarterly dividend on 10 November 2020. The quarterly dividend rose from 41¢ on 6 August 2020. Therefore, Starbucks pays a growing dividend.

 

If you are looking for a good stock in the fast food sector, the Starbucks Corporation (SBUX) is worth considering. This powerful brand makes money, pays an excellent dividend, maintains its value, and generates enormous amounts of cash in a pandemic.

 Originally published at https://marketmadhouse.com on December 22, 2020.