Starbucks Corp. (NASDAQ:SBUX)

The analysis of the annual financial data reveals notable fluctuations and trends across key performance metrics over the examined periods.

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrates significant variability, declining sharply from 2,231,571 thousand USD in 2019 to 1,475,541 thousand USD in 2020. This drop is followed by a robust recovery and growth phase, peaking at 4,625,159 thousand USD in 2021. Subsequently, NOPAT decreases in 2022 to 3,732,356 thousand USD but again rises in 2023 to 4,602,842 thousand USD, before slightly declining to 4,408,732 thousand USD in 2024. Overall, this pattern suggests a period of initial contraction followed by growth and some volatility in recent years.

Cost of Capital

The cost of capital remains relatively stable throughout the years, fluctuating narrowly between 11.77% and 12.26%. The cost slightly decreases in 2024 to 12.03%, indicating relatively consistent capital expense requirements despite market or economic changes.

Invested Capital

Invested capital shows 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. There is a decline in 2022 to 20,459,700 thousand USD, followed by renewed increases in 2023 and 2024, reaching 23,526,800 thousand USD in the latest period. This pattern suggests ongoing investment activity with some reductions possibly related to divestments or asset adjustments.

Economic Profit

Economic profit reflects considerable volatility: initially negative at -190,723 thousand USD in 2019, it declines further to -1,227,865 thousand USD in 2020. A strong turnaround occurs in 2021 with a positive economic profit of 1,738,748 thousand USD, decreasing somewhat to 1,243,836 thousand USD in 2022. The figure increases again to 1,884,247 thousand USD in 2023 and slightly falls to 1,577,912 thousand USD in 2024. These fluctuations indicate changing value creation performance, with notable recovery post-2020 and ongoing positive contributions recently.

In summary, the data indicate a challenging phase around 2020 impacting profitability and economic profit, followed by a strong recovery and growth period. Invested capital levels remain fairly consistent with moderate fluctuations, while the cost of capital exhibits minor variability. The economic profit trends suggest improved value generation abilities after initial setbacks, though some volatility persists. Overall, the company appears to have navigated a period of significant financial volatility and returned to positive economic profit and robust operating performance in the subsequent 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

Economic profit displayed significant volatility over the periods analyzed. Initially, there was a negative value of approximately -190.7 million US dollars in 2019, which sharply declined further to about -1.23 billion in 2020, indicating a considerable loss. However, from 2021 onward, the trend reversed, showing positive economic profit with a peak at approximately 1.74 billion US dollars in 2021. Subsequent years exhibited some fluctuations but maintained positive values, ending with about 1.58 billion US dollars in 2024. This progression suggests a recovery and improved profitability after the sharp downturn in 2020.

Invested Capital

Invested capital showed a general increasing trend over the examined years. Starting from roughly 20.0 billion US dollars in 2019, it increased steadily to approximately 23.0 billion in 2020 and further to about 23.7 billion in 2021. In 2022, there was a decrease to around 20.5 billion, followed by recovery in 2023 and 2024 to approximately 22.2 billion and 23.5 billion, respectively. Despite the dip in 2022, the overall trend suggests growing investment in the company's assets over the period.

Economic Spread Ratio

The economic spread ratio followed a pattern mirroring the economic profit. It started negative at -0.95% in 2019 and worsened significantly to -5.35% in 2020, highlighting decreased returns relative to invested capital. From 2021 onwards, the ratio turned positive, peaking at 8.5% in 2023 before slightly declining to 6.71% in 2024. This positive shift indicates improved efficiency in generating returns above the cost of capital during the latter years.

Overall, the data illustrates a period of financial difficulty in 2020, likely reflecting external challenges impacting profitability and returns. However, the subsequent recovery highlighted by positive economic profit and economic spread ratio suggests effective management of invested capital and enhanced value creation. The fluctuation in invested capital, including the temporary decrease in 2022, may indicate strategic adjustments or reallocation of resources during this recovery phase.

The data indicates significant fluctuations in economic profit over the analyzed periods. Initially, economic profit was negative in 2019 and 2020, reflecting a loss of approximately US$190.7 million and US$1.23 billion respectively. However, from 2021 onward, there was a marked reversal with economic profit turning positive, reaching a peak of approximately US$1.74 billion in 2021, followed by some variation but remaining positive through 2024, where it stands at about US$1.58 billion.

Economic profit trend

There is a clear transition from negative to positive economic profit starting in 2021, denoting a significant improvement in underlying profitability after two years of losses.

Adjusted net revenues

Adjusted net revenues show a consistent upward trend, rising from approximately US$26.1 billion in 2019 to US$36.1 billion in 2024. This steady growth suggests increased sales or pricing power over the years.

Economic profit margin

The economic profit margin similarly reflects this turnaround; from negative margins in 2019 (-0.73%) and 2020 (-5.21%), it shifted to positive territory at 5.98% in 2021. Although it fluctuates thereafter, it remains positive through 2024, settling at 4.37%.

Overall, the data reveals a period of considerable recovery and improvement in financial performance starting in 2021, following significant losses in the preceding years. The upward trajectory in adjusted net revenues supports the gain in economic profit and margin, indicating not only increasing revenue but also enhanced efficiency or profitability relative to invested capital. The slight decrease in economic profit and margin in the most recent year could indicate emerging challenges or a plateau, which may warrant closer monitoring moving forward.