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 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Net operating profit after taxes (NOPAT)1 4,625,159  1,475,541  2,231,571  12,689,054  3,292,441  3,452,299 
Cost of capital2 9.55% 9.24% 9.49% 9.45% 9.73% 9.88%
Invested capital3 24,057,900  23,348,200  20,389,137  27,242,440  17,066,282  15,161,964 
 
Economic profit4 2,328,125  (681,872) 296,457  10,114,668  1,632,694  1,954,468 

Based on: 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), 10-K (reporting date: 2017-10-01), 10-K (reporting date: 2016-10-02).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,625,1599.55% × 24,057,900 = 2,328,125

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 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Net Operating Profit after Taxes (NOPAT)

Starbucks Corp., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Net earnings attributable to Starbucks 4,199,300  928,300  3,599,200  4,518,300  2,884,700  2,817,700 
Deferred income tax expense (benefit)1 (125,000) (28,500) (1,448,800) 726,800  114,200  290,600 
Increase (decrease) in allowance for credit losses2 (1,500) 20,400  (1,300) (1,800) 400  (1,400)
Increase (decrease) in stored value card liability and deferred revenue3 4,100  41,600  (405,200) 7,125,700  121,700  187,400 
Increase (decrease) in equity equivalents4 (122,400) 33,500  (1,855,300) 7,850,700  236,300  476,600 
Interest expense 469,800  437,000  331,000  170,300  92,500  81,300 
Interest expense, operating lease liability5 224,733  222,763  293,028  250,410  177,347  165,130 
Adjusted interest expense 694,533  659,763  624,028  420,710  269,847  246,430 
Tax benefit of interest expense6 (145,852) (138,550) (131,046) (103,074) (94,446) (86,250)
Adjusted interest expense, after taxes7 548,681  521,212  492,982  317,636  175,401  160,179 
(Gain) loss on marketable securities (1,800) (4,900) (900) 3,600  (6,400) (5,200)
Investment income, before taxes (1,800) (4,900) (900) 3,600  (6,400) (5,200)
Tax expense (benefit) of investment income8 378  1,029  189  (882) 2,240  1,820 
Investment income, after taxes9 (1,422) (3,871) (711) 2,718  (4,160) (3,380)
Net income (loss) attributable to noncontrolling interest 1,000  (3,600) (4,600) (300) 200  1,200 
Net operating profit after taxes (NOPAT) 4,625,159  1,475,541  2,231,571  12,689,054  3,292,441  3,452,299 

Based on: 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), 10-K (reporting date: 2017-10-01), 10-K (reporting date: 2016-10-02).

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 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 8,989,300 × 2.50% = 224,733

6 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 694,533 × 21.00% = 145,852

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

8 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 1,800 × 21.00% = 378

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 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Cash Operating Taxes

Starbucks Corp., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Income tax expense 1,156,600  239,700  871,600  1,262,000  1,432,600  1,379,700 
Less: Deferred income tax expense (benefit) (125,000) (28,500) (1,448,800) 726,800  114,200  290,600 
Add: Tax savings from interest expense 145,852  138,550  131,046  103,074  94,446  86,250 
Less: Tax imposed on investment income 378  1,029  189  (882) 2,240  1,820 
Cash operating taxes 1,427,074  405,721  2,451,257  639,156  1,410,606  1,173,530 

Based on: 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), 10-K (reporting date: 2017-10-01), 10-K (reporting date: 2016-10-02).

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 2019 to 2020 but then slightly increased from 2020 to 2021.

Invested Capital

Starbucks Corp., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Current portion of long-term debt 998,900  1,249,900  —  349,900  —  400,000 
Long-term debt, excluding current portion 13,616,900  14,659,600  11,167,000  9,090,200  3,932,600  3,202,200 
Operating lease liability1 8,989,300  8,910,500  8,799,637  8,183,340  7,778,382  6,526,864 
Total reported debt & leases 23,605,100  24,820,000  19,966,637  17,623,440  11,710,982  10,129,064 
Shareholders’ equity (deficit) (5,321,200) (7,805,100) (6,232,200) 1,169,500  5,450,100  5,884,000 
Net deferred tax (assets) liabilities2 (1,726,300) (1,631,800) (1,579,400) 135,500  (789,100) (870,700)
Allowance for credit losses3 25,600  27,100  6,700  8,000  9,800  9,400 
Stored value card liability and deferred revenue4 8,059,100  8,055,000  8,013,400  8,418,600  1,292,900  1,171,200 
Equity equivalents5 6,358,400  6,450,300  6,440,700  8,562,100  513,600  309,900 
Accumulated other comprehensive (income) loss, net of tax6 (147,200) 364,600  503,300  330,300  155,600  108,400 
Noncontrolling interests 6,700  5,700  1,200  6,300  6,900  6,700 
Adjusted shareholders’ equity (deficit) 896,700  (984,500) 713,000  10,068,200  6,126,200  6,309,000 
Marketable securities7 (443,900) (487,300) (290,500) (449,200) (770,900) (1,276,100)
Invested capital 24,057,900  23,348,200  20,389,137  27,242,440  17,066,282  15,161,964 

Based on: 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), 10-K (reporting date: 2017-10-01), 10-K (reporting date: 2016-10-02).

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. invested capital increased from 2019 to 2020 and from 2020 to 2021.

Cost of Capital

Starbucks Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 129,967,096  129,967,096  ÷ 154,970,496  = 0.84 0.84 × 10.93% = 9.16%
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 9.55%

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 × 10.93% = 8.78%
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 9.24%

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 × 10.93% = 9.04%
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 9.49%

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 × 10.93% = 9.05%
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 9.45%

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 »

Capital (fair value)1 Weights Cost of capital
Equity2 81,000,004  81,000,004  ÷ 92,817,386  = 0.87 0.87 × 10.93% = 9.54%
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 9.73%

Based on: 10-K (reporting date: 2017-10-01).

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 81,167,658  81,167,658  ÷ 91,508,522  = 0.89 0.89 × 10.93% = 9.69%
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 9.88%

Based on: 10-K (reporting date: 2016-10-02).

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 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Selected Financial Data (US$ in thousands)
Economic profit1 2,328,125  (681,872) 296,457  10,114,668  1,632,694  1,954,468 
Invested capital2 24,057,900  23,348,200  20,389,137  27,242,440  17,066,282  15,161,964 
Performance Ratio
Economic spread ratio3 9.68% -2.92% 1.45% 37.13% 9.57% 12.89%
Benchmarks
Economic Spread Ratio, Competitors4
Carnival Corp. & plc -29.13% -32.45% -8.39% -8.89% -11.51%
McDonald’s Corp. 10.53% 6.16% 10.46% 12.99% 8.48%

Based on: 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), 10-K (reporting date: 2017-10-01), 10-K (reporting date: 2016-10-02).

1 Economic profit. See details »

2 Invested capital. See details »

3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,328,125 ÷ 24,057,900 = 9.68%

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 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Economic Profit Margin

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

Microsoft Excel
Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Selected Financial Data (US$ in thousands)
Economic profit1 2,328,125  (681,872) 296,457  10,114,668  1,632,694  1,954,468 
 
Net revenues 29,060,600  23,518,000  26,508,600  24,719,500  22,386,800  21,315,900 
Add: Increase (decrease) in stored value card liability and deferred revenue 4,100  41,600  (405,200) 7,125,700  121,700  187,400 
Adjusted net revenues 29,064,700  23,559,600  26,103,400  31,845,200  22,508,500  21,503,300 
Performance Ratio
Economic profit margin2 8.01% -2.89% 1.14% 31.76% 7.25% 9.09%
Benchmarks
Economic Profit Margin, Competitors3
Carnival Corp. & plc -710.29% -284.33% -15.44% -16.51% -22.83%
McDonald’s Corp. 21.62% 14.98% 21.13% 22.79% 14.27%

Based on: 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), 10-K (reporting date: 2017-10-01), 10-K (reporting date: 2016-10-02).

1 Economic profit. See details »

2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenues
= 100 × 2,328,125 ÷ 29,064,700 = 8.01%

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 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.