Starbucks Corp. (NASDAQ:SBUX)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibited significant fluctuations over the periods analyzed. Initially, there was a decline from approximately 2.23 billion USD in 2019 to around 1.48 billion USD in 2020. Subsequently, NOPAT recovered strongly in 2021, reaching about 4.63 billion USD. A slight decrease occurred in 2022 to 3.73 billion USD, followed by another rise to roughly 4.60 billion USD in 2023, and a modest decline to approximately 4.41 billion USD in 2024. Overall, the trend illustrates initial volatility likely due to external factors, followed by a recovery phase and stabilization in the later years.

Cost of Capital

The cost of capital remained relatively stable during the observed periods, fluctuating narrowly between 11.8% and 12.29%. It was lowest in 2020 at 11.8% and peaked slightly at 12.29% in 2023 before settling at 12.06% in 2024. This stability suggests consistent capital market conditions and risk assessments impacting the company's financing costs.

Invested Capital

Invested capital showed a general upward trend over the timeline with intermittent decreases. From about 20 billion USD in 2019, it rose to 23 billion USD in 2020 and peaked near 23.68 billion USD in 2021. A notable reduction occurred in 2022 to approximately 20.46 billion USD. This was followed by recovery in 2023 and 2024 with invested capital amounting to 22.17 billion USD and 23.53 billion USD, respectively. This pattern reflects active capital deployment with some retracting movements likely aligned with strategic adjustments.

Economic Profit

The economic profit began with negative values, showing a loss of about 196 million USD in 2019 and deepening to a loss of around 1.23 billion USD in 2020. However, the company transitioned to positive economic profit in 2021, achieving approximately 1.73 billion USD, followed by a decrease to 1.24 billion USD in 2022. The subsequent years, 2023 and 2024, saw increases in economic profit to approximately 1.88 billion USD and 1.57 billion USD, respectively. This shift indicates improved value creation exceeding the cost of capital after the initial losses, demonstrating enhanced operational efficiency and profitability relative to invested capital.

Net Earnings Attributable to Starbucks

The net earnings exhibited significant fluctuation over the analyzed periods. There was a notable sharp decline from 3,599,200 thousand USD in 2019 to 928,300 thousand USD in 2020, indicating a challenging financial year likely influenced by external factors impacting the business environment.

Subsequently, net earnings recovered markedly in 2021 to 4,199,300 thousand USD, surpassing the pre-decline levels, demonstrating a strong rebound. However, this was followed by a decrease in 2022 to 3,281,600 thousand USD before increasing again to 4,124,500 thousand USD in 2023, showing increased volatility within these years.

In 2024, net earnings slightly decreased to 3,760,900 thousand USD, suggesting some degree of contraction or stabilization after previous gains. Overall, the net earnings reflect a pattern of sharp decline followed by recovery and subsequent fluctuations.

Net Operating Profit After Taxes (NOPAT)

NOPAT trends align partially with net earnings but demonstrate a steadier progression. The measure dropped from 2,231,571 thousand USD in 2019 to 1,475,541 thousand USD in 2020, reflecting a reduction in operational profitability post-tax during the same downturn period.

From 2020 onwards, NOPAT increased significantly to 4,625,159 thousand USD in 2021, indicating improved operating efficiency and profitability. Although it declined to 3,732,356 thousand USD in 2022, it rebounded again in 2023 reaching 4,602,842 thousand USD.

In 2024, there was a slight reduction to 4,408,732 thousand USD, similar to the pattern observed in net earnings. Despite fluctuations, the overall trajectory points to recovery and resilience in operating performance after the initial dip.

General Observations

The period under review reveals a significant impact in the 2020 financial year, possibly linked to broader economic conditions affecting profitability and operations. Subsequent years show recovery and growth, though with some variability.

The correlation between net earnings and NOPAT suggests operational factors primarily drive profitability changes, with tax effects playing a role but less volatility than seen in net earnings.

Overall, despite short-term challenges, the financial performance indicates the company has maintained a capacity for recovery and sustained profit generation over the long term.

Income Tax Expense

The income tax expense exhibits notable fluctuations over the analyzed periods. It decreases significantly from 871,600 thousand US$ in 2019 to 239,700 thousand US$ in 2020. This is followed by a substantial increase to 1,156,600 thousand US$ in 2021. A decline to 948,500 thousand US$ occurs in 2022, after which the expense rises again to 1,277,200 thousand US$ in 2023 before slightly decreasing to 1,207,300 thousand US$ in 2024. Overall, the trend indicates considerable volatility in the income tax expense with marked peaks in 2021 and 2023.

Cash Operating Taxes

Cash operating taxes demonstrate a steep decline from 2,451,257 thousand US$ in 2019 to 405,721 thousand US$ in 2020, representing a significant reduction. Following this, there is a recovery with the tax amount increasing to 1,427,074 thousand US$ in 2021 and then varying downward to 1,074,728 thousand US$ in 2022. The amount again rises in subsequent years to 1,512,061 thousand US$ in 2023 before decreasing slightly to 1,412,248 thousand US$ in 2024. This pattern suggests initial tax relief or reduction in operational tax liabilities in 2020, with a gradual recovery in tax payments in the following years, though the values remain well below the 2019 level.

The financial data reveals several notable trends over the six-year period.

Total Reported Debt & Leases

This figure demonstrates an overall upward trajectory from 19,966,637 thousand USD in 2019 to 25,803,100 thousand USD in 2024. There was a significant increase between 2019 and 2020, exceeding 4.8 billion USD. A slight decrease occurred in 2021 and 2022, followed by a renewed increase in 2023 and 2024. The pattern suggests fluctuating but generally rising leverage levels.

Shareholders’ Deficit

The shareholders’ deficit exhibits considerable volatility during the period. The deficit deepened from a negative 6,232,200 thousand USD in 2019 to a low point of -7,805,100 thousand USD in 2020, indicating an increase in net liabilities relative to equity. The deficit improved in 2021 but deteriorated sharply again in 2022, reaching the lowest level of -8,706,600 thousand USD. Slight recovery is noted in 2023 and 2024, though the deficit remains substantially negative, reflecting continued equity challenges.

Invested Capital

Invested capital initially rose from 20,030,637 thousand USD in 2019 to a peak of 23,683,800 thousand USD in 2021. However, a notable contraction follows in 2022, with invested capital dropping to 20,459,700 thousand USD. Subsequent years show a gradual rebound, reaching 23,526,800 thousand USD in 2024, nearly matching the previous peak. This suggests fluctuations in the base of capital employed, potentially correlating with operational adjustments or capital allocation strategies.

Overall, the data reflects increasing debt obligations accompanied by fluctuating equity deficits and an invested capital base that experiences contraction and recovery phases. These patterns may indicate strategic financial management efforts to balance growth, capital structure, and equity concerns amid varying market conditions.

Economic Profit Trends

The economic profit exhibited significant fluctuations over the periods analyzed. Initially, there was a negative value of -196,467 thousand US dollars, which deepened in the subsequent year to -1,234,266 thousand US dollars, indicating a deteriorating profitability position. Starting from 2021, the company experienced a marked improvement, posting positive economic profit figures, peaking at 1,877,779 thousand US dollars in 2023 before decreasing slightly to 1,571,242 thousand US dollars in 2024. This suggests a recovery and strengthening of value creation after a period of economic loss.

Invested Capital Movements

The invested capital showed an overall upward trend despite some variability. It increased from 20,030,637 thousand US dollars in 2019 to a peak of 23,683,800 thousand in 2021. A decline was observed in 2022, bringing the figure down to 20,459,700 thousand US dollars, followed by a rebound to 23,526,800 thousand US dollars by 2024. This pattern indicates periodic adjustments in invested capital, possibly reflecting strategic reallocations or operational restructuring.

Economic Spread Ratio Analysis

The economic spread ratio, reflecting the profitability relative to the invested capital cost, started negative at -0.98% in 2019 and worsened to -5.37% in 2020, corresponding with the negative economic profit. From 2021 onward, the ratio turned positive, reaching a high of 8.47% in 2023 before a slight decrease to 6.68% in 2024. This positive spread demonstrates enhanced efficiency in generating returns above the cost of capital in the recent years, in alignment with the economic profit improvements.

Overall Insights

There is a clear turnaround visible from 2020 to 2021, transitioning from negative economic profit and spread to robust positive performance. The fluctuations in invested capital suggest strategic responses to market conditions or operational needs. The improvement in economic spread ratio confirms better capital utilization efficiency. However, the slight decline in economic profit and spread in 2024 signals the need for continued focus on maintaining profitable growth and capital efficiency.

Economic Profit

The economic profit displays a significant fluctuation over the years. It started with a negative value of approximately -196 million in 2019, which further declined sharply in 2020 to about -1.23 billion. However, from 2021 onwards, the figure turned positive, reaching a peak of around 1.87 billion in 2023 before a slight decrease to approximately 1.57 billion in 2024. This trend suggests a notable recovery and improvement in profitability after the sharp downturn in 2020.

Adjusted Net Revenues

Adjusted net revenues showed a general upward trend over the period. Beginning at roughly 26.1 billion in 2019, revenues dipped in 2020 to approximately 23.6 billion. From 2021, revenues steadily increased each year, reaching around 36.1 billion by 2024. This indicates a consistent growth in revenue generation following the 2020 decline.

Economic Profit Margin

The economic profit margin mirrored the economic profit trend. It was negative in 2019 and 2020, with values of -0.75% and -5.24% respectively, highlighting losses relative to revenues. From 2021, the margin turned positive, peaking at 5.96% in 2021, then fluctuating to 3.85% in 2022, rising again to 5.24% in 2023, and finally decreasing to 4.35% in 2024. These variations indicate ongoing improvements in profitability relative to revenues, despite some year-to-year variability.

Overall Insights

The data shows a clear impact on financial performance during 2020, likely due to external adverse factors, with both economic profit and margin suffering notable declines. Post-2020, there is a marked recovery in both profitability and revenues, with economic profit returning to positive territory and revenues increasing steadily. Although economic profit margin shows some volatility after 2021, it remains positive and generally strong, suggesting effective management in enhancing profitability following the downturn.