Stock Analysis on Net

Starbucks Corp. (NASDAQ:SBUX)

Economic Value Added (EVA)

Microsoft Excel

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
12 months ended: Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018
Net operating profit after taxes (NOPAT)1 4,602,842 3,732,356 4,625,159 1,475,541 2,231,571 12,689,054
Cost of capital2 11.37% 11.27% 11.30% 10.92% 11.21% 11.18%
Invested capital3 22,171,000 20,459,700 23,683,800 22,970,900 20,030,637 26,740,540
 
Economic profit4 2,082,333 1,425,601 1,949,719 (1,031,824) (14,815) 9,700,194

Based on: 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29), 10-K (reporting date: 2018-09-30).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,602,84211.37% × 22,171,000 = 2,082,333

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. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Net Operating Profit after Taxes (NOPAT)

Starbucks Corp., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018
Net earnings attributable to Starbucks 4,124,500 3,281,600 4,199,300 928,300 3,599,200 4,518,300
Deferred income tax expense (benefit)1 (59,300) 23,100 (125,000) (28,500) (1,448,800) 726,800
Increase (decrease) in allowance for credit losses2 (3,400) 1,600 (1,500) 20,400 (1,300) (1,800)
Increase (decrease) in stored value card liability and deferred revenue3 (119,600) (137,500) 4,100 41,600 (405,200) 7,125,700
Increase (decrease) in equity equivalents4 (182,300) (112,800) (122,400) 33,500 (1,855,300) 7,850,700
Interest expense 550,100 482,900 469,800 437,000 331,000 170,300
Interest expense, operating lease liability5 285,203 227,783 224,733 222,763 293,028 250,410
Adjusted interest expense 835,303 710,683 694,533 659,763 624,028 420,710
Tax benefit of interest expense6 (175,414) (149,244) (145,852) (138,550) (131,046) (103,074)
Adjusted interest expense, after taxes7 659,889 561,440 548,681 521,212 492,982 317,636
(Gain) loss on marketable securities 700 400 (1,800) (4,900) (900) 3,600
Investment income, before taxes 700 400 (1,800) (4,900) (900) 3,600
Tax expense (benefit) of investment income8 (147) (84) 378 1,029 189 (882)
Investment income, after taxes9 553 316 (1,422) (3,871) (711) 2,718
Net income (loss) attributable to noncontrolling interest 200 1,800 1,000 (3,600) (4,600) (300)
Net operating profit after taxes (NOPAT) 4,602,842 3,732,356 4,625,159 1,475,541 2,231,571 12,689,054

Based on: 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29), 10-K (reporting date: 2018-09-30).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for credit losses.

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 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 9,200,100 × 3.10% = 285,203

6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 835,303 × 21.00% = 175,414

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

8 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= -700 × 21.00% = -147

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. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Cash Operating Taxes

Starbucks Corp., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018
Income tax expense 1,277,200 948,500 1,156,600 239,700 871,600 1,262,000
Less: Deferred income tax expense (benefit) (59,300) 23,100 (125,000) (28,500) (1,448,800) 726,800
Add: Tax savings from interest expense 175,414 149,244 145,852 138,550 131,046 103,074
Less: Tax imposed on investment income (147) (84) 378 1,029 189 (882)
Cash operating taxes 1,512,061 1,074,728 1,427,074 405,721 2,451,257 639,156

Based on: 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29), 10-K (reporting date: 2018-09-30).

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. cash operating taxes decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Invested Capital

Starbucks Corp., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018
Current portion of long-term debt 1,818,600 1,749,000 998,900 1,249,900 349,900
Long-term debt, excluding current portion 13,547,600 13,119,900 13,616,900 14,659,600 11,167,000 9,090,200
Operating lease liability1 9,200,100 8,760,900 8,989,300 8,910,500 8,799,637 8,183,340
Total reported debt & leases 24,566,300 23,629,800 23,605,100 24,820,000 19,966,637 17,623,440
Shareholders’ equity (deficit) (7,994,800) (8,706,600) (5,321,200) (7,805,100) (6,232,200) 1,169,500
Net deferred tax (assets) liabilities2 (1,755,200) (1,681,100) (1,726,300) (1,631,800) (1,579,400) 135,500
Allowance for credit losses3 23,800 27,200 25,600 27,100 6,700 8,000
Stored value card liability and deferred revenue4 7,802,000 7,921,600 8,059,100 8,055,000 8,013,400 8,418,600
Equity equivalents5 6,070,600 6,267,700 6,358,400 6,450,300 6,440,700 8,562,100
Accumulated other comprehensive (income) loss, net of tax6 778,200 463,200 (147,200) 364,600 503,300 330,300
Noncontrolling interests 7,000 7,900 6,700 5,700 1,200 6,300
Adjusted shareholders’ equity (deficit) (1,139,000) (1,967,800) 896,700 (984,500) 713,000 10,068,200
Work in progress7 (607,500) (558,700) (374,100) (377,300) (358,500) (501,900)
Marketable securities8 (648,800) (643,600) (443,900) (487,300) (290,500) (449,200)
Invested capital 22,171,000 20,459,700 23,683,800 22,970,900 20,030,637 26,740,540

Based on: 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29), 10-K (reporting date: 2018-09-30).

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 work in progress.

8 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. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Cost of Capital

Starbucks Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 120,001,419 120,001,419 ÷ 142,661,219 = 0.84 0.84 × 13.01% = 10.95%
Debt3 13,459,700 13,459,700 ÷ 142,661,219 = 0.09 0.09 × 3.55% × (1 – 21.00%) = 0.26%
Operating lease liability4 9,200,100 9,200,100 ÷ 142,661,219 = 0.06 0.06 × 3.10% × (1 – 21.00%) = 0.16%
Total: 142,661,219 1.00 11.37%

Based on: 10-K (reporting date: 2023-10-01).

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 112,427,010 112,427,010 ÷ 134,414,910 = 0.84 0.84 × 13.01% = 10.88%
Debt3 13,227,000 13,227,000 ÷ 134,414,910 = 0.10 0.10 × 3.30% × (1 – 21.00%) = 0.26%
Operating lease liability4 8,760,900 8,760,900 ÷ 134,414,910 = 0.07 0.07 × 2.60% × (1 – 21.00%) = 0.13%
Total: 134,414,910 1.00 11.27%

Based on: 10-K (reporting date: 2022-10-02).

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 129,967,096 129,967,096 ÷ 154,970,496 = 0.84 0.84 × 13.01% = 10.91%
Debt3 16,014,100 16,014,100 ÷ 154,970,496 = 0.10 0.10 × 3.29% × (1 – 21.00%) = 0.27%
Operating lease liability4 8,989,300 8,989,300 ÷ 154,970,496 = 0.06 0.06 × 2.50% × (1 – 21.00%) = 0.11%
Total: 154,970,496 1.00 11.30%

Based on: 10-K (reporting date: 2021-10-03).

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 109,776,161 109,776,161 ÷ 136,624,161 = 0.80 0.80 × 13.01% = 10.46%
Debt3 17,937,500 17,937,500 ÷ 136,624,161 = 0.13 0.13 × 3.19% × (1 – 21.00%) = 0.33%
Operating lease liability4 8,910,500 8,910,500 ÷ 136,624,161 = 0.07 0.07 × 2.50% × (1 – 21.00%) = 0.13%
Total: 136,624,161 1.00 10.92%

Based on: 10-K (reporting date: 2020-09-27).

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 × 13.01% = 10.76%
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 11.21%

Based on: 10-K (reporting date: 2019-09-29).

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 × 13.01% = 10.78%
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 11.18%

Based on: 10-K (reporting date: 2018-09-30).

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
Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018
Selected Financial Data (US$ in thousands)
Economic profit1 2,082,333 1,425,601 1,949,719 (1,031,824) (14,815) 9,700,194
Invested capital2 22,171,000 20,459,700 23,683,800 22,970,900 20,030,637 26,740,540
Performance Ratio
Economic spread ratio3 9.39% 6.97% 8.23% -4.49% -0.07% 36.28%
Benchmarks
Economic Spread Ratio, Competitors4
Airbnb Inc. 13.08% 14.50% -7.76% -114.07%
Booking Holdings Inc. 16.82% 5.92% -11.49% -11.17% 30.48%
Chipotle Mexican Grill Inc. 7.61% 3.58% -1.10% -3.13% -2.89%
McDonald’s Corp. 8.91% 6.11% 8.52% 4.26% 8.50%

Based on: 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29), 10-K (reporting date: 2018-09-30).

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,082,333 ÷ 22,171,000 = 9.39%

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. economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Economic Profit Margin

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

Microsoft Excel
Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018
Selected Financial Data (US$ in thousands)
Economic profit1 2,082,333 1,425,601 1,949,719 (1,031,824) (14,815) 9,700,194
 
Net revenues 35,975,600 32,250,300 29,060,600 23,518,000 26,508,600 24,719,500
Add: Increase (decrease) in stored value card liability and deferred revenue (119,600) (137,500) 4,100 41,600 (405,200) 7,125,700
Adjusted net revenues 35,856,000 32,112,800 29,064,700 23,559,600 26,103,400 31,845,200
Performance Ratio
Economic profit margin2 5.81% 4.44% 6.71% -4.38% -0.06% 30.46%
Benchmarks
Economic Profit Margin, Competitors3
Airbnb Inc. 7.50% 11.44% -6.98% -174.64%
Booking Holdings Inc. 8.99% 4.73% -15.73% -23.94% 22.30%
Chipotle Mexican Grill Inc. 4.62% 2.23% -0.80% -2.57% -2.18%
McDonald’s Corp. 17.48% 11.97% 17.51% 10.36% 17.18%

Based on: 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29), 10-K (reporting date: 2018-09-30).

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenues
= 100 × 2,082,333 ÷ 35,856,000 = 5.81%

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 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. economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.