Starbucks Corp. (NASDAQ:SBUX)

The financial data indicates fluctuating performance in key financial metrics over the six-year period.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibits a distinct pattern with an initial decline from approximately 2.23 billion to 1.48 billion between 2019 and 2020, followed by a substantial recovery and growth reaching about 4.63 billion in 2021. Subsequently, a dip occurred in 2022 to around 3.73 billion, but the figure rose again near to 4.60 billion in 2023 before a slight decrease to approximately 4.41 billion in 2024. This suggests recovery and expansion after a significant downturn, with minor volatility in recent years.

Cost of Capital

The cost of capital remained relatively stable, fluctuating slightly between 11.78% and 12.27% over the period. The small range indicates consistency in the company’s risk and expected returns with no major shifts in capital costs.

Invested Capital

Invested capital increased steadily from about 20.03 billion in 2019 to a peak exceeding 23.68 billion in 2021, followed by a decline to around 20.46 billion in 2022. After this decrease, the invested capital rose again steadily, reaching approximately 23.53 billion in 2024. This trend reflects periods of both contraction and expansion in asset deployment or capital investments within the business.

Economic Profit

Economic profit demonstrates significant volatility, starting with negative values in 2019 and 2020 at -193 million and -1.23 billion respectively, indicating returns below the cost of capital during those years. From 2021 onward, economic profit turned positive and showed strong gains peaking near 1.74 billion in 2023 before a slight decrease to approximately 1.58 billion in 2024. The positive economic profit in recent years highlights enhanced value creation beyond the cost of capital.

Overall, the company experienced a challenging downturn in operating profitability and economic profit around 2020, with a recovery phase evident from 2021 onward. Capital costs remained stable, implying consistent risk profile expectations. Despite some fluctuations in invested capital, the company managed to generate positive economic profit in the latter years, reflecting improved operational efficiency and value creation.

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 showed significant volatility over the analyzed periods. It started with a negative value of approximately -193 million US dollars in the fiscal year ending September 2019 and further declined to a low of around -1.23 billion US dollars in 2020. This marked downturn likely reflects challenging economic conditions or operational difficulties during that time. However, a notable recovery occurred in 2021, with economic profit turning positive to approximately 1.74 billion US dollars and maintaining positive figures in subsequent years, ending at about 1.58 billion US dollars in 2024. Despite fluctuations, the economic profit remained positive from 2021 onward, indicating improved profitability and value creation.

Invested Capital

The invested capital demonstrated a generally increasing trend over the years, albeit with some fluctuations. Starting from around 20.0 billion US dollars in 2019, it rose to approximately 23.0 billion in 2020 and peaked near 23.7 billion in 2021. A decline was seen in 2022, where it dropped to about 20.5 billion, followed by a rise again in 2023 and 2024 to near 22.2 billion and 23.5 billion respectively. This pattern suggests continued capital investment with occasional adjustments, possibly reflecting strategic reallocations or divestments.

Economic Spread Ratio

The economic spread ratio, which measures the difference between the return on invested capital and its cost, exhibited marked changes during the assessment period. It began negative at approximately -0.96% in 2019 and dipped further to -5.36% in 2020, consistent with the low economic profit in that year. A strong rebound took place in 2021, reaching 7.33%, and while it declined slightly afterward, it remained positive above 6% through 2024. The highest spread ratio was recorded in 2023 at about 8.49%. The positive spread from 2021 onward indicates that the company consistently earned returns exceeding its cost of capital during these years.

Summary

The financial data reflects a period of financial stress and recovery. The sharp negative economic profit and economic spread ratio in 2020 correlate with broader economic challenges. Subsequent years show a strong turnaround with sustained positive economic profit and economic spread ratio, reflecting successful operational and financial strategies. Invested capital increased over the long term with some tactical fluctuations. Overall, the company demonstrated resilience and effective capital utilization, generating value that surpasses the cost of capital in recent years.

The financial data reveals notable fluctuations in the company's economic profit and related metrics over the six-year period analyzed.

Adjusted Net Revenues

Adjusted net revenues demonstrate an overall upward trend, increasing from 26.1 billion US dollars in 2019 to 36.1 billion US dollars in 2024. This represents consistent growth, with a particularly strong upward movement between 2020 and 2023, where revenues rose from 23.6 billion to 35.9 billion US dollars, before plateauing slightly in 2024.

Economic Profit

The economic profit exhibits significant volatility. Initially, it was negative in 2019 and 2020, reaching a low point of approximately -1.23 billion US dollars in 2020. However, beginning in 2021, economic profit turned positive, showing substantial improvement with a peak of approximately 1.74 billion US dollars in that year. Although it experienced some decline afterward, economic profit remained positive through 2024, signaling enhanced value creation compared to the losses seen in the earlier years.

Economic Profit Margin

The economic profit margin aligns with the trends seen in economic profit. It was negative in 2019 and 2020, reflecting losses relative to revenues, with the lowest margin of -5.22% occurring in 2020. From 2021 onward, margins turned positive, peaking at 5.97% in 2021 before exhibiting modest fluctuations, ending at 4.36% in 2024. Despite a slight decrease from the peak, the margin remains substantially improved compared to the early years.

Overall, the data indicates a period of recovery and growth following early setbacks, with significant gains in profitability and margin ratios commencing in 2021. The positive economic profit alongside steady revenue growth suggests improved operational efficiency and value generation in the more recent years. The minor decrease in economic profit margin from its peak warrants monitoring to ensure sustained financial health.