Starbucks Corp. (NASDAQ:SBUX)

The analysis of financial performance over the six-year period reveals several key trends and insights.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a significant fluctuation across the years. After a decrease from 2,231,571 thousand US dollars in 2019 to 1,475,541 thousand in 2020, there was a sharp recovery and increase to 4,625,159 thousand in 2021. Following this peak, NOPAT decreased to 3,732,356 thousand in 2022 but rose again to above 4.6 million thousand in 2023. In 2024, NOPAT slightly declined to 4,408,732 thousand. Overall, the data indicate resilience and a strong rebound after 2020, despite some volatility.

Cost of Capital

The cost of capital remained relatively stable, fluctuating narrowly between 11.79% and 12.28%. The highest value was observed in 2023 (12.28%), while the lowest occurred in 2020 (11.79%). This stability suggests consistent capital market conditions and risk profile over the period.

Invested Capital

Invested capital showed growth overall, increasing from approximately 20 billion US dollars in 2019 to over 23.5 billion in 2024. There were periods of fluctuation, particularly a decline from 23.68 billion in 2021 to 20.46 billion in 2022, followed by recovery in subsequent years. This pattern may indicate periods of divestment or capital restructuring followed by reinvestment.

Economic Profit

Economic profit displayed a notable turnaround. The company experienced negative economic profit in both 2019 and 2020, worsening from -194,926 thousand to -1,232,549 thousand. From 2021 onward, there was a shift to positive economic profit, reaching a peak of 1,879,514 thousand in 2023 before slightly declining to 1,573,032 thousand in 2024. This positive shift indicates improved value creation relative to cost of capital during the latter years.

In summary, the trend analysis reflects a strong recovery in operational profitability after 2020, stable cost of capital, increasing invested capital with some fluctuations, and a significant improvement in economic profit signaling better value generation in recent years.

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

The economic profit exhibited significant fluctuations over the periods analyzed. Initially, the company experienced considerable losses in economic profit, with values of -194,926 thousand US dollars in 2019 and a steeper decline to -1,232,549 thousand US dollars in 2020. However, a marked turnaround occurred in 2021, where economic profit turned positive to 1,733,707 thousand US dollars. This positive momentum continued in subsequent years with economic profits of 1,239,493 thousand US dollars in 2022, reaching a peak of 1,879,514 thousand US dollars in 2023, before a slight decline to 1,573,032 thousand US dollars in 2024. These trends indicate a recovery and improvement in value creation post-2020 losses.

Invested Capital

Invested capital showed an overall upward trend, increasing from 20,030,637 thousand US dollars in 2019 to 23,526,800 thousand US dollars in 2024. There was a notable increase from 2019 to 2021, peaking at 23,683,800 thousand US dollars, followed by a decrease to 20,459,700 thousand US dollars in 2022. Subsequently, invested capital rose again, with increases in 2023 and 2024. The fluctuations in invested capital suggest adjustments in asset base or investment levels over time, possibly reflecting strategic decisions or responses to market conditions.

Economic Spread Ratio

The economic spread ratio demonstrated a transition from negative values in 2019 and 2020 to positive margins from 2021 onwards. Initially, the ratio was -0.97% in 2019 and deteriorated to -5.37% in 2020, indicating value destruction during these years. A recovery began in 2021, with a ratio climbing to 7.32%, remaining positive through 2022 (6.06%) and 2023 (8.48%). A slight decline to 6.69% occurred in 2024. This pattern aligns with the economic profit changes and suggests enhanced efficiency or profitability in capital utilization after 2020.

Overall Insights

The data indicates a challenging period for the entity around 2020, with economic losses and negative economic spread. Subsequently, the company demonstrated significant recovery with strong economic profitability and positive spread, reflecting improved financial performance. The invested capital remained relatively stable with some fluctuations, implying strategic capital management over time. The financial metrics portray a resilient and improving trend in value creation and capital efficiency in the most recent years.

Economic Profit

The economic profit experienced significant fluctuations over the six-year period. Initially, a negative value of -194,926 thousand US dollars was recorded in 2019, which worsened substantially to -1,232,549 thousand US dollars in 2020. However, from 2021 onwards, there was a marked recovery and improvement, with positive economic profits recorded for the subsequent years: 1,733,707 thousand US dollars in 2021, 1,239,493 thousand US dollars in 2022, peaking at 1,879,514 thousand US dollars in 2023 before slightly declining to 1,573,032 thousand US dollars in 2024. The trend demonstrates a turnaround from loss toward consistent profitability with some variability in the magnitude of profit.

Adjusted Net Revenues

The adjusted net revenues showed a declining trend from 2019 to 2020, dropping from 26,103,400 thousand US dollars to 23,559,600 thousand US dollars, indicating a contraction likely influenced by external or internal factors. From 2021, a consistent increasing trend is observed, rising sharply to 29,064,700 thousand US dollars and continuing to increase annually to reach 36,119,000 thousand US dollars in 2024. This upward trend in revenue indicates strong growth momentum and recovery post-2020.

Economic Profit Margin

The economic profit margin mirrored the economic profit trend with negative margins of -0.75% in 2019 and a more significant negative margin of -5.23% in 2020, reflecting the less profitable conditions during this period. A sharp turnaround happened in 2021 when the margin turned positive at 5.96%. Although the margin decreased slightly to 3.86% in 2022, it rebounded to 5.24% in 2023 and then declined modestly to 4.36% in 2024. Overall, despite some fluctuations, the margin has remained positive and generally stable post-2020, confirming improved profitability relative to revenues.