Starbucks Corp. (NASDAQ:SBUX)

Net Operating Profit After Taxes (NOPAT)

The NOPAT experienced a notable decline from 2,231,571 thousand USD in 2019 to 1,475,541 thousand USD in 2020, indicating a significant decrease in operational profitability during this period. Following this downturn, NOPAT showed a strong recovery and growth, reaching 4,625,159 thousand USD in 2021, then slightly decreasing to 3,732,356 thousand USD in 2022. It rebounded again in 2023 to 4,602,842 thousand USD, before experiencing a modest decline to 4,408,732 thousand USD in 2024. Overall, despite fluctuations, the latter years demonstrate a generally strong operational profit performance relative to the earlier period.

Cost of Capital

The cost of capital remained relatively stable over the years, fluctuating within a narrow range from 11.68% to 12.16%. The highest value was 12.16% in 2023, and the lowest was 11.68% in 2020. This stability suggests consistent financing costs and required returns for investments throughout the periods analyzed.

Invested Capital

Invested capital showed an upward trend from 20,030,637 thousand USD in 2019 to 22,970,900 thousand USD in 2020 and further to 23,683,800 thousand USD in 2021. A decline occurred in 2022, falling to 20,459,700 thousand USD, thereafter increasing again to 22,171,000 thousand USD in 2023 and 23,526,800 thousand USD in 2024. This pattern indicates cyclical adjustments in asset and capital deployment, with a general tendency towards growth after the dip in 2022.

Economic Profit

Economic profit was negative in 2019 and 2020, at -171,586 thousand USD and -1,206,538 thousand USD respectively, signaling that returns did not cover the cost of capital in those years. There was a significant turnaround in 2021, with economic profit turning positive at 1,761,699 thousand USD, followed by a slight decrease in 2022 to 1,263,610 thousand USD. Economic profit improved again in 2023 to 1,905,796 thousand USD but declined somewhat to 1,600,134 thousand USD in 2024. The trend demonstrates recovery and sustained generation of value above the cost of capital starting in 2021, despite some volatility.

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.

The economic profit of the company exhibits significant fluctuations over the analyzed periods. It begins with a negative value of -171,586 thousand US dollars in 2019 and worsens sharply to -1,206,538 thousand US dollars in 2020, indicating a substantial decline in profitability. However, from 2021 onward, economic profit turns positive and increases markedly to 1,761,699 thousand US dollars, followed by a slight decrease to 1,263,610 thousand US dollars in 2022. The upward trend resumes in 2023, reaching 1,905,796 thousand US dollars, before slightly declining again to 1,600,134 thousand US dollars in 2024. This pattern suggests a recovery and stabilization after a period of significant losses.

Invested capital demonstrates an overall increasing trend with some variability. Starting at 20,030,637 thousand US dollars in 2019, it rises to 22,970,900 thousand US dollars in 2020 and continues to increase to 23,683,800 thousand US dollars in 2021. There is a noticeable decline in 2022 to 20,459,700 thousand US dollars, followed by a recovery to 22,171,000 thousand US dollars in 2023 and further growth to 23,526,800 thousand US dollars in 2024. This pattern indicates a general expansion of the capital base with a temporary contraction in 2022.

The economic spread ratio mirrors the trends observed in economic profit, reflecting the company’s capacity to generate returns above its cost of capital. Initially negative at -0.86% in 2019, it worsens significantly to -5.25% in 2020. Thereafter, it turns positive, reaching a peak of 7.44% in 2021, but declines to 6.18% in 2022. It rebounds again to 8.6% in 2023 before slightly decreasing to 6.8% in 2024. This trajectory aligns with the recovery in economic profit and suggests an improvement in the company’s economic value creation over most of the period.

Summary of key financial trends:

The period studied shows a substantial turnaround in economic profit and economic spread ratio after a severe downturn in 2020. The company’s economic profit shifted from significant losses to sustained positive performance. Invested capital grew over time despite a dip in 2022, indicating ongoing investments or asset base adjustments. The economic spread ratio improvement confirms enhanced efficiency in generating returns above capital costs after 2020, pointing to strengthened operational and financial performance.

Economic Profit

The economic profit experienced considerable volatility during the analyzed periods. Initially, the economic profit was negative at -171,586 thousand US dollars in 2019, which further declined sharply to -1,206,538 thousand US dollars in 2020. A significant positive turnaround occurred thereafter, with economic profit increasing to 1,761,699 thousand US dollars in 2021. Although the profit slightly decreased in subsequent years, it remained positive at 1,263,610 thousand in 2022, 1,905,796 thousand in 2023, and 1,600,134 thousand in 2024, reflecting recovery and sustained profitability after the initial losses.

Adjusted Net Revenues

Adjusted net revenues showed a general increasing trend across the period. Starting at 26,103,400 thousand US dollars in 2019, there was a dip to 23,559,600 thousand in 2020, likely reflecting external challenges during that year. Following 2020, revenues consistently grew, reaching 29,064,700 thousand in 2021, 32,112,800 thousand in 2022, 35,856,000 thousand in 2023, and 36,119,000 thousand in 2024. This steady increase post-2020 indicates a strong recovery and growth in revenue generation capacity.

Economic Profit Margin

The economic profit margin mirrored the patterns seen in economic profit, starting negative at -0.66% in 2019 and deteriorating further to -5.12% in 2020. The margin rebounded considerably to positive values thereafter: 6.06% in 2021, although this declined somewhat to 3.93% in 2022 before improving again to 5.32% in 2023 and then slightly decreasing to 4.43% in 2024. This indicates a return to profitability and improved efficiency after 2020, though with some fluctuations in margin levels over the subsequent years.

Summary

The data reveals a period of significant financial challenge around 2020, reflected in negative economic profit and margin and lower revenues. Subsequently, there has been a notable recovery and growth phase, with increasing revenues and consistently positive economic profits and profit margins from 2021 onward. This suggests effective management and strategic adjustments that contributed to improved financial performance and profitability after the difficulties experienced in 2020.