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Welcome to the Hardcore Husky Forums. Folks who are well-known in Cyberland and not that dumb.

Baseman lowers Starbucks (SBUX) to Hold.

BasemanBaseman Posts: 9,836
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Despite the compelling long term story of growth, Starbucks' recent uptick stretches their valuation to a forward P/E north of 30. Starbuck announced they will incur higher restructuring charges reconfiguring their stores to focus on walk-up and drive-thru traffic originated from its mobile app. Expect Cap-ex to impact earnings through the end of 2021. Plus, who can afford fancy coffee in this economy.
TequillaSwayeDoog_de_Jour
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Comments

  • PurpleThrobberPurpleThrobber Posts: 22,666
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    Baseman said:

    Despite the compelling long term story of growth, Starbucks' recent uptick stretches their valuation to a forward P/E north of 30. Starbuck announced they will incur higher restructuring charges reconfiguring their stores to focus on walk-up and drive-thru traffic originated from its mobile app. Expect Cap-ex to impact earnings through the end of 2021. Plus, who can afford fancy coffee in this economy.

    COVID gutted the need for downtown office presence. Rioters make urban locations unattractive. China, well fuck that shit. It's also cheaper to drink coffee at home.

    And fuck Howard Schulz with a redhot poker. Fuck that motherfucker.



    SwayeBleachedAnusDawgPitchfork51YellowSnow
  • creepycougcreepycoug Posts: 16,212
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    Baseman said:

    Despite the compelling long term story of growth, Starbucks' recent uptick stretches their valuation to a forward P/E north of 30. Starbuck announced they will incur higher restructuring charges reconfiguring their stores to focus on walk-up and drive-thru traffic originated from its mobile app. Expect Cap-ex to impact earnings through the end of 2021. Plus, who can afford fancy coffee in this economy.

    How much can cap ex be to do what they've been doing, which is basically nothing. A few plexi-glass barriers at the counter, some circular "stand here" stickers on the ground, and that's it.

    They've cut way back on their labor costs and people are starting to hit Starbucks again hard. Everytime I go, the line-up for the drive through is around the fucking block. It is something people can treat themselves to w/o exposure to the crud.

    Starbucks will continue to thrive for the same reason it always has: it's an affordable luxury. The coffee at a Cuban bakery in Miami is 20X better and 100X cheaper than the swill they serve at Starbucks. For that reason, my father said Starbucks would never catch on in Miami. Of course, he was dead wrong.
    Doog_de_JourPitchfork51YellowSnow
  • BasemanBaseman Posts: 9,836
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    Baseman said:

    Despite the compelling long term story of growth, Starbucks' recent uptick stretches their valuation to a forward P/E north of 30. Starbuck announced they will incur higher restructuring charges reconfiguring their stores to focus on walk-up and drive-thru traffic originated from its mobile app. Expect Cap-ex to impact earnings through the end of 2021. Plus, who can afford fancy coffee in this economy.

    How much can cap ex be to do what they've been doing, which is basically nothing. A few plexi-glass barriers at the counter, some circular "stand here" stickers on the ground, and that's it.

    They've cut way back on their labor costs and people are starting to hit Starbucks again hard. Everytime I go, the line-up for the drive through is around the fucking block. It is something people can treat themselves to w/o exposure to the crud.

    Starbucks will continue to thrive for the same reason it always has: it's an affordable luxury. The coffee at a Cuban bakery in Miami is 20X better and 100X cheaper than the swill they serve at Starbucks. For that reason, my father said Starbucks would never catch on in Miami. Of course, he was dead wrong.
    $1.7 Billion the last 12 months. Down from almost $2B for their fiscal 2019 ending 9/2019. Now factor in closing stores, retro fitting existing stores or adding walk in sites, you're still looking at a high capex run rate without adding new stores.

    I love the stock, just not at this price. I'm not selling. Waiting for a more attractive entry point.
    TequillacreepycougpawzPitchfork51
  • TequillaTequilla Posts: 16,138
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    I did my UW Business Strategy project on Starbucks back in the early 2000s ...

    Back then, it was all about the in store ambiance/community and coffee ... all you had to do was check out the U-Village SBUX in QFC at midnight to see the “brand”

    At the time though they barely had drive thru’s or much of a food lineup ... which were my primary recommendations (expand the number you can serve and for those that embrace the community you keep them on-site)

    SBUX will continue to evolve their offerings as society changes and will do fine ... it’s a stock that I never imagine looking at in a portfolio and hating
    creepycoug
  • BasemanBaseman Posts: 9,836
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    Tequilla said:

    I did my UW Business Strategy project on Starbucks back in the early 2000s ...

    Back then, it was all about the in store ambiance/community and coffee ... all you had to do was check out the U-Village SBUX in QFC at midnight to see the “brand”

    At the time though they barely had drive thru’s or much of a food lineup ... which were my primary recommendations (expand the number you can serve and for those that embrace the community you keep them on-site)

    SBUX will continue to evolve their offerings as society changes and will do fine ... it’s a stock that I never imagine looking at in a portfolio and hating

    Core --never sell-- holding for me.
    Tequillacreepycoug
  • godawgstgodawgst Posts: 1,369
    Swaye's Wigwam 1,500 Up Votes 250 Answers Fifth Anniversary
    Baseman said:

    Tequilla said:

    I did my UW Business Strategy project on Starbucks back in the early 2000s ...

    Back then, it was all about the in store ambiance/community and coffee ... all you had to do was check out the U-Village SBUX in QFC at midnight to see the “brand”

    At the time though they barely had drive thru’s or much of a food lineup ... which were my primary recommendations (expand the number you can serve and for those that embrace the community you keep them on-site)

    SBUX will continue to evolve their offerings as society changes and will do fine ... it’s a stock that I never imagine looking at in a portfolio and hating

    Core --never sell-- holding for me.
    From 1950 thru 2010 everyone (including myself) would have said the same about Phillip Morris about never selling and been 1000% right.

    Espresso's are the new smokes (American's guilty pleasure minus the death).

    All it takes is enough studies showing there is a correltion between a faster death rate/other underlying medical issues and drinking them daily and it's gameover for them, and then that justified sky high valuation craters.

    And overseas won't save them. I thought that would be Phillip Morris saving grace as people over there don't get the option of not using personal responsibilty as a reason to sue, but that still hasn't stopped the decline in cig sales.



    TequillaMiley_Cyrus
  • BasemanBaseman Posts: 9,836
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    godawgst said:

    Baseman said:

    Tequilla said:

    I did my UW Business Strategy project on Starbucks back in the early 2000s ...

    Back then, it was all about the in store ambiance/community and coffee ... all you had to do was check out the U-Village SBUX in QFC at midnight to see the “brand”

    At the time though they barely had drive thru’s or much of a food lineup ... which were my primary recommendations (expand the number you can serve and for those that embrace the community you keep them on-site)

    SBUX will continue to evolve their offerings as society changes and will do fine ... it’s a stock that I never imagine looking at in a portfolio and hating

    Core --never sell-- holding for me.
    From 1950 thru 2010 everyone (including myself) would have said the same about Phillip Morris about never selling and been 1000% right.

    Espresso's are the new smokes (American's guilty pleasure minus the death).

    All it takes is enough studies showing there is a correltion between a faster death rate/other underlying medical issues and drinking them daily and it's gameover for them, and then that justified sky high valuation craters.

    And overseas won't save them. I thought that would be Phillip Morris saving grace as people over there don't get the option of not using personal responsibilty as a reason to sue, but that still hasn't stopped the decline in cig sales.



    If, and when, the US outlaws coffee advertising, as they did with cigarettes 50 years ago (40 years before 2010), I'll reconsider my Starbucks holdings.
    TequillacreepycougDoog_de_JourPitchfork51
  • RaceBannonRaceBannon Posts: 59,894
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    Starbucks sells a legal highly addictive drug
    pawzPitchfork51YellowSnowRoadDawg55
  • creepycougcreepycoug Posts: 16,212
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    Baseman said:

    Baseman said:

    Despite the compelling long term story of growth, Starbucks' recent uptick stretches their valuation to a forward P/E north of 30. Starbuck announced they will incur higher restructuring charges reconfiguring their stores to focus on walk-up and drive-thru traffic originated from its mobile app. Expect Cap-ex to impact earnings through the end of 2021. Plus, who can afford fancy coffee in this economy.

    How much can cap ex be to do what they've been doing, which is basically nothing. A few plexi-glass barriers at the counter, some circular "stand here" stickers on the ground, and that's it.

    They've cut way back on their labor costs and people are starting to hit Starbucks again hard. Everytime I go, the line-up for the drive through is around the fucking block. It is something people can treat themselves to w/o exposure to the crud.

    Starbucks will continue to thrive for the same reason it always has: it's an affordable luxury. The coffee at a Cuban bakery in Miami is 20X better and 100X cheaper than the swill they serve at Starbucks. For that reason, my father said Starbucks would never catch on in Miami. Of course, he was dead wrong.
    $1.7 Billion the last 12 months. Down from almost $2B for their fiscal 2019 ending 9/2019. Now factor in closing stores, retro fitting existing stores or adding walk in sites, you're still looking at a high capex run rate without adding new stores.

    I love the stock, just not at this price. I'm not selling. Waiting for a more attractive entry point.
    Need to listen to the next earnings call. Some analyst will ask them to peel back the onion on that number. Store closures makes sense. But they are doing smoking bidness right now with stores mostly 'as is'.
  • creepycougcreepycoug Posts: 16,212
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    I suppose anything is possible, but we've? been drinking coffee for a really, really, really long tim and we've been drinking a lot of it. That scenario seems unlikely.
  • BasemanBaseman Posts: 9,836
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    Baseman said:

    Baseman said:

    Despite the compelling long term story of growth, Starbucks' recent uptick stretches their valuation to a forward P/E north of 30. Starbuck announced they will incur higher restructuring charges reconfiguring their stores to focus on walk-up and drive-thru traffic originated from its mobile app. Expect Cap-ex to impact earnings through the end of 2021. Plus, who can afford fancy coffee in this economy.

    How much can cap ex be to do what they've been doing, which is basically nothing. A few plexi-glass barriers at the counter, some circular "stand here" stickers on the ground, and that's it.

    They've cut way back on their labor costs and people are starting to hit Starbucks again hard. Everytime I go, the line-up for the drive through is around the fucking block. It is something people can treat themselves to w/o exposure to the crud.

    Starbucks will continue to thrive for the same reason it always has: it's an affordable luxury. The coffee at a Cuban bakery in Miami is 20X better and 100X cheaper than the swill they serve at Starbucks. For that reason, my father said Starbucks would never catch on in Miami. Of course, he was dead wrong.
    $1.7 Billion the last 12 months. Down from almost $2B for their fiscal 2019 ending 9/2019. Now factor in closing stores, retro fitting existing stores or adding walk in sites, you're still looking at a high capex run rate without adding new stores.

    I love the stock, just not at this price. I'm not selling. Waiting for a more attractive entry point.
    Need to listen to the next earnings call. Some analyst will ask them to peel back the onion on that number. Store closures makes sense. But they are doing smoking bidness right now with stores mostly 'as is'.
    They also lost .46 a share last quarter and the consensus estimate for next quarter is .30, $2.50 FYE 2021. Too rich for me at the moment.
  • godawgstgodawgst Posts: 1,369
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    I suppose anything is possible, but we've? been drinking coffee for a really, really, really long tim and we've been drinking a lot of it. That scenario seems unlikely.

    That would be general consenus, but if America is going to have socialized medicine, you can bet there is going to be people/groups wanting constraints on unhealthy choices (booze, fast food, junk food, soda).

    Think of New York limiting size of pop drink cups at Convience Store.
    creepycoug
  • pawzpawz Posts: 8,975
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    edited August 18

    Starbucks sells a legal highly addictive drug

    Actually they sell two. Sugar being the other.

    At some point its going to get into the mainstream that sugar = cancer. But that's another conversation. I imagine it would be pretty easy for sbux to transition to a stevia or the like.

  • Miley_CyrusMiley_Cyrus Posts: 530
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    godawgst said:

    Baseman said:

    Tequilla said:

    I did my UW Business Strategy project on Starbucks back in the early 2000s ...

    Back then, it was all about the in store ambiance/community and coffee ... all you had to do was check out the U-Village SBUX in QFC at midnight to see the “brand”

    At the time though they barely had drive thru’s or much of a food lineup ... which were my primary recommendations (expand the number you can serve and for those that embrace the community you keep them on-site)

    SBUX will continue to evolve their offerings as society changes and will do fine ... it’s a stock that I never imagine looking at in a portfolio and hating

    Core --never sell-- holding for me.
    From 1950 thru 2010 everyone (including myself) would have said the same about Phillip Morris about never selling and been 1000% right.

    Espresso's are the new smokes (American's guilty pleasure minus the death).

    All it takes is enough studies showing there is a correltion between a faster death rate/other underlying medical issues and drinking them daily and it's gameover for them, and then that justified sky high valuation craters.

    And overseas won't save them. I thought that would be Phillip Morris saving grace as people over there don't get the option of not using personal responsibilty as a reason to sue, but that still hasn't stopped the decline in cig sales.



    Okay sure this makes sense if that were true... but it’s not as of today, and there’s no basis for expecting that to happen.
  • Pitchfork51Pitchfork51 Posts: 19,299
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    Any man getting starbucks for himself is gay as fuck all
  • FireCohenFireCohen Posts: 16,394
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    Any man getting starbucks for himself is gay as fuck all

    Green tee Frappuccino with whip cream :wink:
  • Capex has little impact on EPS btw. Will be back to $3+ in EPS shortly and competition decimated (how’s your little corner barista going to do through all this?).

    Should be trading at $90+ in this market. Quality restaurants stocks always trade at a high multiple (check out CMG)
  • BasemanBaseman Posts: 9,836
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    Capex has little impact on EPS btw. Will be back to $3+ in EPS shortly and competition decimated (how’s your little corner barista going to do through all this?).

    Should be trading at $90+ in this market. Quality restaurants stocks always trade at a high multiple (check out CMG)

    Wrong. Cash flow from operations - Capex = Free Cash Flow

    Free Cash Flow - Dividends = $ for growth or stock buybacks.

    Starbucks won't cut their divided and stock Buybacks has has been a major driver of Starbucks EPS growth.

    With downward pressure from decreased sales and projected capex increases for reconfiguring existing stores and closures, EPS growth will suffer for the foreseeable future.

    HTH
  • BasemanBaseman Posts: 9,836
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    Capex has little impact on EPS btw. Will be back to $3+ in EPS shortly and competition decimated (how’s your little corner barista going to do through all this?).

    Should be trading at $90+ in this market. Quality restaurants stocks always trade at a high multiple (check out CMG)

    Like Starbucks, CMG should be a core long term holding but is currently way overvalued at 52 times forward 2021 earnings. I added to my position in March and own at an average cost basis of $400 (17 times 2021 earnings) At a projected 5yr EPS growth of 15%, its a Hold
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