Starbucks Corp. (NASDAQ:SBUX)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited considerable fluctuations over the observed periods. It declined significantly from approximately 2.23 billion in 2019 to around 1.48 billion in 2020, indicative of the impact of adverse conditions during that year. Subsequently, NOPAT rebounded sharply to over 4.6 billion in 2021, demonstrating robust recovery and growth. In 2022, there was a moderate decline to approximately 3.73 billion, followed again by an increase near 4.6 billion in 2023. The most recent data in 2024 shows a slight contraction to approximately 4.41 billion, suggesting some volatility but overall maintaining elevated levels compared to pre-2020.

Cost of Capital

The cost of capital remained relatively stable throughout the period, fluctuating within a narrow band around 12%. The values slightly decreased from 11.99% in 2019 to 11.67% in 2020, followed by a gradual increase peaking at 12.16% in 2023. The latest figure in 2024 is 11.93%, indicating modest variability but overall consistent cost levels that may reflect stable market conditions or capital structure management.

Invested Capital

Invested capital increased steadily from approximately 20.03 billion in 2019 to a peak near 23.67 billion in 2021. A notable reduction to about 20.46 billion occurred in 2022, possibly reflecting asset divestitures or decreased capital expenditures. Invested capital then rose again to 22.17 billion in 2023 and further increased to 23.53 billion in 2024. This pattern suggests a strategic reinvestment or expansion following a temporary contraction.

Economic Profit

Economic profit was negative in 2019 and 2020, with a deeper loss in 2020, highlighting a period when returns did not cover the cost of capital. Beginning in 2021, economic profit turned positive at approximately 1.76 billion and remained positive through subsequent years, reflecting improved value creation. The economic profit showed fluctuations with a minor decline in 2022 to about 1.27 billion, an increase to 1.91 billion in 2023, and a slight decrease to 1.60 billion in 2024. This trend indicates successful management in generating returns above capital costs, 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 demonstrates significant fluctuations over the periods analyzed. Initially, there was a negative economic profit of -169,682 thousand US$ in 2019, which worsened substantially in 2020 to -1,204,416 thousand US$. This sharp decline suggests substantial challenges or increased costs during this period. From 2021 onward, the economic profit turns positive, reaching a peak of 1,907,941 thousand US$ in 2023, followed by a slight decrease to 1,602,346 thousand US$ in 2024. This recovery and growth indicate improved profitability and efficient capital use in the latter years.

Invested capital shows an overall upward trend across the observed periods, starting from approximately 20.03 billion US$ in 2019 and rising to about 23.53 billion US$ in 2024. There is a noticeable dip in 2022 to around 20.46 billion US$, but the investment increases again in subsequent years. The growth in invested capital suggests ongoing investment activity and expansion efforts, albeit with some contraction in 2022.

The economic spread ratio follows a pattern consistent with changes in economic profit. It was negative in 2019 and 2020, reflecting returns below the cost of capital, with a particularly steep decline to -5.24% in 2020. The ratio then switches to positive values starting in 2021, peaking at 8.61% in 2023, indicating that returns on invested capital exceeded the cost of capital by a notable margin. The slight decrease to 6.81% in 2024 still represents a healthy economic spread.

Economic profit trends

Shifted from losses in 2019-2020 to sustained positive profits from 2021 onward, peaking in 2023 before a moderate decline

Invested capital

Generally increased over the period with a temporary reduction in 2022, suggesting cycles of investment and consolidation

Economic spread ratio

Mirrored economic profit trends, transitioning from negative spreads below cost of capital to consistently positive spreads above it

Overall insights

The data reflect initial financial challenges in 2020 followed by recovery and enhanced value creation, with investments supporting growth and improved returns above the cost of capital.

Economic Profit

The economic profit experienced significant volatility over the analyzed periods. Initially, it was negative at approximately -169.7 million in 2019, deepening sharply to about -1.2 billion in 2020. However, a strong reversal occurred in 2021, with economic profit turning positive to nearly 1.76 billion. This positive trend continued through 2022 and 2023, peaking at around 1.91 billion in 2023 before slightly declining to approximately 1.60 billion in 2024. Overall, the data shows a remarkable recovery from substantial losses to sustained profitability.

Adjusted Net Revenues

Adjusted net revenues exhibited consistent growth throughout the periods. Starting at roughly 26.1 billion in 2019, revenues dipped slightly in 2020 to about 23.6 billion, likely reflecting external challenges during that year. Thereafter, a steady upward trajectory was observed, reaching approximately 29.1 billion in 2021, 32.1 billion in 2022, and further increasing to 35.9 billion in 2023. By 2024, revenues plateaued slightly at around 36.1 billion, indicating ongoing but moderated revenue growth.

Economic Profit Margin

The economic profit margin mirrored the economic profit trend, beginning with negative margins of -0.65% in 2019 and a deeper negative margin of -5.11% in 2020. This was followed by a marked improvement in 2021 to a positive margin of 6.07%. Subsequent periods saw a moderate decline in margin, settling at 3.94% in 2022, increasing again to 5.32% in 2023, and then slightly dropping to 4.44% in 2024. The margin dynamics highlight variability but maintain positive profitability margins since 2021.