Is Starbucks (SBUX) stock a good buy?

Is Starbucks (SBUX) stock a good buy?

This is a step-by-step stock review to answer the question, is Starbucks (SBUX) stock a good buy?

This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.

What are the 4Ms?

  • MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
  • Meaning – The meaning is the business model and how scalable the revenue streams are.
  • Moat – The moat is how the business compares to other companies in the same Sector and Industry.
  • Management – The management is the track record of the CEO.

What 4M score are we going for?

  • 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
  • 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
  • 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.


Table of Contents

The following links will direct you to key topics to help answer the question, is Starbucks (SBUX) stock a good buy?

  1.  Starbucks Company History
  2. MOS (Margin of Safety)
  3. Meaning
  4. Moat
  5. Management
  6. 4M Score
  7. Is Starbucks (SBUX) stock a good buy

1. Starbucks Company History

When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.

  • Founded: Starbucks was founded in 1971.
  • Founders: Jerry Baldwin, Zev Siegl, and Gordon Bowker.
  • Original Location: First store opened in Pike Place Market, Seattle, Washington.
  • Early Years: Initially sold high-quality coffee beans and equipment.
  • Transformation: Howard Schultz joined in 1982, inspired by Italian coffee bars, he shifted the focus to espresso beverages.
  • Expansion: Schultz purchased the company in 1987 and rapidly expanded the concept.
  • Going Public: Starbucks went public in 1992, significantly increasing its capital for expansion.
  • Global Presence: Now has over 30,000 stores in more than 80 countries worldwide.
  • Products: Known for a wide range of coffee beverages, teas, pastries, and snacks.
  • Brand Innovations: Introduced popular items like Frappuccino, and seasonal drinks like Pumpkin Spice Latte.
  • Customer Experience: Focuses on creating a third place between home and work, with a cozy atmosphere and free Wi-Fi.
  • Sustainability: Committed to ethical sourcing of coffee, reducing environmental impact, and supporting farmers.
  • Community Engagement: Invests in community initiatives and promotes diversity and inclusion.
  • Digital Innovation: Strong presence with mobile app, loyalty program, and online ordering.
  • Employee Focus: Known for providing benefits like health insurance, tuition coverage, and stock options to employees, referred to as “partners”.

2. MOS (Margin of Safety)

When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.

  • Summary: Watch
  • Score: 72
  • MOS: 1%

To see the most up-to-date Summary, Score, and MOS, please log into Tykr.

3. Meaning

When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.

Here is how Starbucks (SBUX) makes money:

  • Coffee Sales: Earns revenue from selling a variety of coffee beverages, including espresso, brewed coffee, and specialty drinks.
  • Food Sales: Generates income from food items such as pastries, sandwiches, and snacks.
  • Retail Products: Sells packaged coffee beans, instant coffee, tea, and other merchandise like mugs and coffee makers.
  • Licensed Stores: Earns royalties and licensing fees from licensed Starbucks stores operated by partners.
  • Ready-to-Drink Beverages: Collaborates with companies like PepsiCo to sell bottled beverages in grocery stores and other retail locations.
  • Syrups and Mixes: Sells branded syrups, sauces, and drink mixes for at-home use.
  • Loyalty Program: Increases customer spending and retention through its Starbucks Rewards program, driving sales.
  • Mobile App and Digital Sales: Facilitates orders and payments through its mobile app, increasing convenience and sales.
  • Seasonal and Promotional Items: Boosts revenue with limited-time offers and seasonal products like the Pumpkin Spice Latte.
  • International Expansion: Generates significant revenue from its international locations across multiple countries.
  • Coffee Subscription Services: Offers subscription services for regular delivery of coffee products.
  • Partnerships and Collaborations: Partners with other brands for co-branded products and exclusive offerings, enhancing revenue streams.

4. Moat

When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Starbucks stacks up against other companies.

  1. Wingstop Inc.(WING) – 83
  2. Starbucks Corporation. (SBUX) – 72
  3. Denny’s Corporation. (DENN) – 72
  4. Nathan’s Famous, Inc.(NATH) – 72
  5. RAVE Restaurant Group, Inc. (RAVE) – 67
  6. Bloomin’ Brands, Inc. (BLMN) – 61

To see the most up-to-date Summary, Score, and MOS on each stock, please log into Tykr.

5. Management

When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.

  • Leadership Transition: Laxman Narasimhan successfully assumed the role of CEO in April 2023, following an immersive transition period working closely with Howard Schultz.
  • Cultural Immersion: Completed extensive hands-on training, including earning his barista certification and working in over 30 Starbucks stores globally to understand operations and connect with partners (employees).
  • Reinvention Plan: Played a key role in advancing Starbucks’ “Reinvention” strategy aimed at enhancing the partner and customer experience, focusing on digital innovation and operational efficiency.
  • Human Connection Focus: Emphasized rebuilding and strengthening connections with partners and customers post-COVID, which is central to Starbucks’ mission.
  • Innovation and Technology: Introduced and supported new technologies, such as virtual reality training for new equipment, to improve store experiences for partners and customers.
  • Education and Recognition: Celebrated milestones with partners, such as the graduation of Starbucks employees from Arizona State University through the Starbucks College Achievement Plan.

These accomplishments highlight Narasimhan’s commitment to understanding the business deeply, fostering innovation, and enhancing the Starbucks experience for both employees and customers.

6. 4M Score

All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.

What 4M score are we going for?

  • 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
  • 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
  • 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.

👉 The 4M Score of Starbucks  is 65/100.

To see the most up-to-date 4M Score, please log into Tykr.

7. Is Starbucks (SBUX) stock a good buy?

Some of the top questions investors can have is Starbucks (SBUX) stock a good buy or should I buy Starbucks (SBUX) stock?

Investing in Starbucks can be a rewarding choice due to its enduring brand strength, global presence, and resilience in the face of market challenges. As a renowned leader in the coffee industry, Starbucks commands a loyal customer base and enjoys widespread recognition for its premium coffee offerings and inviting ambiance. Its strategic expansion initiatives, including innovative product launches and store openings in key markets, contribute to sustained revenue growth and market dominance. Starbucks’ commitment to social responsibility and sustainability further enhances its brand appeal, resonating with socially conscious consumers and reinforcing long-term brand loyalty. Additionally, the company’s digitalization efforts, such as mobile ordering and loyalty programs, drive customer engagement and revenue streams. With a proven track record of delivering shareholder value and a strong foundation for continued growth, Starbucks remains an attractive investment opportunity for those seeking stability and potential returns in the consumer goods sector.

To truly know if Starbucks is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.

If you found this stock review interesting, you may also like this review on Chewy.