QS Research · Michael Burry's Scion Capital analyst template · 2006
STARBUCKS CORP (SBUX)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -9% · downside -39% · upside +21%
Section 13's TTM-to-Jun-28 base is stale because it excludes Q4 FY2026 and the China JV deconsolidation, so I use one earnings base for all cases: FY2027 guided non-GAAP EPS midpoint $3.20 [S98], versus TTM net income of $1.98B on 1.14B shares, or about $1.74 per share. At 30x that base is $96.00 (-8.9%), at 20x it is $64.00 (-39.3%), and at 40x it is $128.00 (+21.4%). That does not meet the long rule (needs +30% base and downside no worse than -25%) or the short rule (needs -30% base), so the stock is a watch. The turnaround is real—five positive comp quarters, 14.0% Q4 non-GAAP margin, China converted to a licensed JV, dividend raised and buybacks to resume—but the price already embeds much of it and FY2027 revenue is guided down about 1%.
Key numbers
- Share price: $105.41
- Market cap: $120.17B
- Latest financial period: TTM to Jun 28, 2026
- Revenue (TTM): $38.34B
- EV / EBITDA (TTM): 28.3x
- P/E (TTM): 60.6x
The 15 boxes
- ✓ 1. Long-form business notes
Starbucks makes most of its revenue from company-operated coffeehouses: 83% of FY2025 total net revenues, with licensed stores at 12% and Channel Development at 5% of segment revenues; FY2025 segment mix was North America 74%, International 21%, Channel Development 5%. The latest 10-K shows a larger, more international store base than FY2020 (40,990 stores and 89 markets in FY2025 vs 32,660 stores and 83 markets in FY2020), with segment definitions changed to North America/International/Channel Development. FY2025 revenue reached $37.18B, but operating income fell to $2.94B from $5.41B in FY2024, alongside the Back to Starbucks reset and Q4 FY2025 restructuring/coffeehouse closures.
- ✓ 2. Competitive advantage
SBUX has a real but soft-edged moat: a globally recognized brand backed by indefinitely renewable trademarks (Starbucks, the logo, Starbucks Reserve, Frappuccino) and patents with roughly fifteen years of remaining life, competing mainly against specialty coffee shops, quick-service restaurants and ready-to-drink coffee. The moat has not shown up in recent operating results: revenue rose from $35.98B in FY2023 to $37.18B in FY2025, yet operating income fell from $5.87B to $2.94B and operating cash flow from $6.10B in FY2024 to $4.75B in FY2025, with equity at -$8.10B. Scale is real (89 markets, ~74% of FY2025 net revenues in North America) but concentrated in one segment and dependent on partners such as Nestlé and large licensees.
- ✓ 3. 10-Q takeaways
Q3 FY2026 (quarter ended 2026-06-28) shows the China deconsolidation distorting the top line but a healthier underlying store trend: total net revenues fell 1.4% to $9,322.7M while global comparable store sales rose 7.9% (U.S. +7.9% on +4.2% transactions, +3.6% ticket), and operating margin expanded 60 bps to 10.5% with operating income of $980.4M. The reported net earnings of $1,045.3M ($0.91 diluted) are not an operating result: they include a $536.3M pre-tax gain on the China divestiture, while Q3 also carried $302.6M of restructuring and impairments (Reserve/Roastery impairment, severance). Year-to-date revenue is up 4.2% to $28,769.3M but YTD operating margin is down 20 bps to 9.4%, and the YTD effective tax rate is inflated to 36.5% by a $273M discrete China-related charge. Balance sheet is stronger post-deal: cash $3,449.8M and long-term debt down to $11,780.2M from $14,575.9M.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
Sign in with a QuantSignals Premium or Gold plan to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.