Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Starbucks Corp. (NASDAQ:SBUX)

Economic Value Added (EVA)

Advanced level

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Starbucks Corp., economic profit calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended: Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016 Sep 27, 2015
Net operating profit after taxes (NOPAT)1 1,475,541  2,231,571  12,689,054  3,292,441  3,452,299  3,108,422 
Cost of capital2 8.40% 8.62% 8.58% 8.81% 8.95% 9.25%
Invested capital3 23,348,200  20,389,137  27,242,440  17,066,282  15,161,964  12,932,291 
 
Economic profit4 (484,767) 473,564  10,351,786  1,789,163  2,095,758  1,911,789 

Based on: 10-K (filing date: 2020-11-12), 10-K (filing date: 2019-11-15), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-18), 10-K (filing date: 2015-11-12).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2020 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,475,5418.40% × 23,348,200 = -484,767

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Starbucks Corp.’s economic profit decreased from 2018 to 2019 and from 2019 to 2020.

Net Operating Profit after Taxes (NOPAT)

Starbucks Corp., NOPAT calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended: Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016 Sep 27, 2015
Net earnings attributable to Starbucks 928,300  3,599,200  4,518,300  2,884,700  2,817,700  2,757,400 
Deferred income tax expense (benefit)1 (28,500) (1,448,800) 726,800  114,200  290,600  20,400 
Increase (decrease) in allowance for doubtful accounts2 20,400  (1,300) (1,800) 400  (1,400) 4,100 
Increase (decrease) in stored value card liability and deferred revenue3 41,600  (405,200) 7,125,700  121,700  187,400  189,300 
Increase (decrease) in equity equivalents4 33,500  (1,855,300) 7,850,700  236,300  476,600  213,800 
Interest expense 437,000  331,000  170,300  92,500  81,300  70,500 
Interest expense, operating lease liability5 222,763  293,028  250,410  177,347  165,130  134,188 
Adjusted interest expense 659,763  624,028  420,710  269,847  246,430  204,688 
Tax benefit of interest expense6 (138,550) (131,046) (103,074) (94,446) (86,250) (71,641)
Adjusted interest expense, after taxes7 521,212  492,982  317,636  175,401  160,179  133,047 
(Gain) loss on marketable securities (4,900) (900) 3,600  (6,400) (5,200) 3,500 
Investment income, before taxes (4,900) (900) 3,600  (6,400) (5,200) 3,500 
Tax expense (benefit) of investment income8 1,029  189  (882) 2,240  1,820  (1,225)
Investment income, after taxes9 (3,871) (711) 2,718  (4,160) (3,380) 2,275 
Net income (loss) attributable to noncontrolling interest (3,600) (4,600) (300) 200  1,200  1,900 
Net operating profit after taxes (NOPAT) 1,475,541  2,231,571  12,689,054  3,292,441  3,452,299  3,108,422 

Based on: 10-K (filing date: 2020-11-12), 10-K (filing date: 2019-11-15), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-18), 10-K (filing date: 2015-11-12).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in stored value card liability and deferred revenue.

4 Addition of increase (decrease) in equity equivalents to net earnings attributable to Starbucks.

5 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 8,910,500 × 2.50% = 222,763

6 2020 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 659,763 × 21.00% = 138,550

7 Addition of after taxes interest expense to net earnings attributable to Starbucks.

8 2020 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 4,900 × 21.00% = 1,029

9 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Starbucks Corp.’s NOPAT decreased from 2018 to 2019 and from 2019 to 2020.

Cash Operating Taxes

Starbucks Corp., cash operating taxes calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended: Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016 Sep 27, 2015
Income tax expense 239,700  871,600  1,262,000  1,432,600  1,379,700  1,143,700 
Less: Deferred income tax expense (benefit) (28,500) (1,448,800) 726,800  114,200  290,600  20,400 
Add: Tax savings from interest expense 138,550  131,046  103,074  94,446  86,250  71,641 
Less: Tax imposed on investment income 1,029  189  (882) 2,240  1,820  (1,225)
Cash operating taxes 405,721  2,451,257  639,156  1,410,606  1,173,530  1,196,166 

Based on: 10-K (filing date: 2020-11-12), 10-K (filing date: 2019-11-15), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-18), 10-K (filing date: 2015-11-12).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Starbucks Corp.’s cash operating taxes increased from 2018 to 2019 but then decreased significantly from 2019 to 2020.

Invested Capital

Starbucks Corp., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel LibreOffice Calc
Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016 Sep 27, 2015
Current portion of long-term debt 1,249,900  —  349,900  —  400,000  — 
Long-term debt, excluding current portion 14,659,600  11,167,000  9,090,200  3,932,600  3,202,200  2,347,500 
Operating lease liability1 8,910,500  8,799,637  8,183,340  7,778,382  6,526,864  5,102,191 
Total reported debt & leases 24,820,000  19,966,637  17,623,440  11,710,982  10,129,064  7,449,691 
Shareholders’ equity (deficit) (7,805,100) (6,232,200) 1,169,500  5,450,100  5,884,000  5,818,000 
Net deferred tax (assets) liabilities2 (1,631,800) (1,579,400) 135,500  (789,100) (870,700) (1,137,400)
Allowance for doubtful accounts3 27,100  6,700  8,000  9,800  9,400  10,800 
Stored value card liability and deferred revenue4 8,055,000  8,013,400  8,418,600  1,292,900  1,171,200  983,800 
Equity equivalents5 6,450,300  6,440,700  8,562,100  513,600  309,900  (142,800)
Accumulated other comprehensive (income) loss, net of tax6 364,600  503,300  330,300  155,600  108,400  199,400 
Noncontrolling interests 5,700  1,200  6,300  6,900  6,700  1,800 
Adjusted shareholders’ equity (deficit) (984,500) 713,000  10,068,200  6,126,200  6,309,000  5,876,400 
Marketable securities7 (487,300) (290,500) (449,200) (770,900) (1,276,100) (393,800)
Invested capital 23,348,200  20,389,137  27,242,440  17,066,282  15,161,964  12,932,291 

Based on: 10-K (filing date: 2020-11-12), 10-K (filing date: 2019-11-15), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-18), 10-K (filing date: 2015-11-12).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of stored value card liability and deferred revenue.

5 Addition of equity equivalents to shareholders’ equity (deficit).

6 Removal of accumulated other comprehensive income.

7 Subtraction of marketable securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Starbucks Corp.’s invested capital decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Cost of Capital

Starbucks Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 109,776,161  109,776,161  ÷ 136,625,461  = 0.80 0.80 × 9.88% = 7.94%
Debt3 17,938,800  17,938,800  ÷ 136,625,461  = 0.13 0.13 × 3.19% × (1 – 21.00%) = 0.33%
Operating lease liability4 8,910,500  8,910,500  ÷ 136,625,461  = 0.07 0.07 × 2.50% × (1 – 21.00%) = 0.13%
Total: 136,625,461  1.00 8.40%

Based on: 10-K (filing date: 2020-11-12).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 99,452,010  99,452,010  ÷ 120,284,647  = 0.83 0.83 × 9.88% = 8.17%
Debt3 12,033,000  12,033,000  ÷ 120,284,647  = 0.10 0.10 × 3.33% × (1 – 21.00%) = 0.26%
Operating lease liability4 8,799,637  8,799,637  ÷ 120,284,647  = 0.07 0.07 × 3.33% × (1 – 21.00%) = 0.19%
Total: 120,284,647  1.00 8.62%

Based on: 10-K (filing date: 2019-11-15).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 84,559,296  84,559,296  ÷ 102,064,636  = 0.83 0.83 × 9.88% = 8.18%
Debt3 9,322,000  9,322,000  ÷ 102,064,636  = 0.09 0.09 × 3.06% × (1 – 24.50%) = 0.21%
Operating lease liability4 8,183,340  8,183,340  ÷ 102,064,636  = 0.08 0.08 × 3.06% × (1 – 24.50%) = 0.19%
Total: 102,064,636  1.00 8.58%

Based on: 10-K (filing date: 2018-11-16).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 81,000,004  81,000,004  ÷ 92,817,386  = 0.87 0.87 × 9.88% = 8.62%
Debt3 4,039,000  4,039,000  ÷ 92,817,386  = 0.04 0.04 × 2.28% × (1 – 35.00%) = 0.06%
Operating lease liability4 7,778,382  7,778,382  ÷ 92,817,386  = 0.08 0.08 × 2.28% × (1 – 35.00%) = 0.12%
Total: 92,817,386  1.00 8.81%

Based on: 10-K (filing date: 2017-11-17).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 81,167,658  81,167,658  ÷ 91,508,522  = 0.89 0.89 × 9.88% = 8.76%
Debt3 3,814,000  3,814,000  ÷ 91,508,522  = 0.04 0.04 × 2.53% × (1 – 35.00%) = 0.07%
Operating lease liability4 6,526,864  6,526,864  ÷ 91,508,522  = 0.07 0.07 × 2.53% × (1 – 35.00%) = 0.12%
Total: 91,508,522  1.00 8.95%

Based on: 10-K (filing date: 2016-11-18).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 90,676,736  90,676,736  ÷ 98,180,927  = 0.92 0.92 × 9.88% = 9.12%
Debt3 2,402,000  2,402,000  ÷ 98,180,927  = 0.02 0.02 × 2.63% × (1 – 35.00%) = 0.04%
Operating lease liability4 5,102,191  5,102,191  ÷ 98,180,927  = 0.05 0.05 × 2.63% × (1 – 35.00%) = 0.09%
Total: 98,180,927  1.00 9.25%

Based on: 10-K (filing date: 2015-11-12).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Starbucks Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016 Sep 27, 2015
Selected Financial Data (US$ in thousands)
Economic profit1 (484,767) 473,564  10,351,786  1,789,163  2,095,758  1,911,789 
Invested capital2 23,348,200  20,389,137  27,242,440  17,066,282  15,161,964  12,932,291 
Performance Ratio
Economic spread ratio3 -2.08% 2.32% 38.00% 10.48% 13.82% 14.78%
Benchmarks
Economic Spread Ratio, Competitors4
Booking Holdings Inc. 34.27% 41.33% 25.62% 20.05% 25.31%
McDonald’s Corp. 12.17% 14.75% 10.21% 7.83% 6.06%

Based on: 10-K (filing date: 2020-11-12), 10-K (filing date: 2019-11-15), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-18), 10-K (filing date: 2015-11-12).

1 Economic profit. See details »

2 Invested capital. See details »

3 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -484,767 ÷ 23,348,200 = -2.08%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Starbucks Corp.’s economic spread ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Economic Profit Margin

Starbucks Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016 Sep 27, 2015
Selected Financial Data (US$ in thousands)
Economic profit1 (484,767) 473,564  10,351,786  1,789,163  2,095,758  1,911,789 
 
Net revenues 23,518,000  26,508,600  24,719,500  22,386,800  21,315,900  19,162,700 
Add: Increase (decrease) in stored value card liability and deferred revenue 41,600  (405,200) 7,125,700  121,700  187,400  189,300 
Adjusted net revenues 23,559,600  26,103,400  31,845,200  22,508,500  21,503,300  19,352,000 
Performance Ratio
Economic profit margin2 -2.06% 1.81% 32.51% 7.95% 9.75% 9.88%
Benchmarks
Economic Profit Margin, Competitors3
Booking Holdings Inc. 25.44% 21.10% 12.97% 12.37% 18.98%
McDonald’s Corp. 24.61% 25.87% 17.17% 12.02% 10.82%

Based on: 10-K (filing date: 2020-11-12), 10-K (filing date: 2019-11-15), 10-K (filing date: 2018-11-16), 10-K (filing date: 2017-11-17), 10-K (filing date: 2016-11-18), 10-K (filing date: 2015-11-12).

1 Economic profit. See details »

2 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenues
= 100 × -484,767 ÷ 23,559,600 = -2.06%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company’s profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Starbucks Corp.’s economic profit margin deteriorated from 2018 to 2019 and from 2019 to 2020.