{"id":14122,"date":"2023-09-20T05:58:37","date_gmt":"2023-09-20T05:58:37","guid":{"rendered":"https:\/\/prosfunds.com\/markets\/can-starbucks-stock-return-to-pre-inflation-shock-highs\/"},"modified":"2023-09-20T05:58:38","modified_gmt":"2023-09-20T05:58:38","slug":"can-starbucks-stock-return-to-pre-inflation-shock-highs","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=14122","title":{"rendered":"Can Starbucks Stock Return To Pre-Inflation Shock Highs?"},"content":{"rendered":"
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[Note: Starbucks
\n SBUX
\n <\/fbs-ticker>\u2019 fiscal year 2022 ended October 2, 2022]<\/p>\n

Starbucks stock<\/strong> (NASDAQ
\n NDAQ
\n <\/fbs-ticker>: SBUX), the world\u2019s leading roaster, marketer, and retailer of specialty coffee worldwide, currently trades at $96 per share, around 24% below its level of $126 seen on July 26, 2021 (pre-inflation shock high), and has the potential for sizable gains. SBUX saw its stock trading at around $70.95 on June 16, 2022, when the Fed kept increasing rates, and now remains up by about 36% from those levels. In comparison, the S&P 500 gained about 15% during this period. SBUX stock has benefited from better-than-expected results so far this year. The company\u2019s sales grew 12% year-over-year (y-o-y) to $26.6 billion in the first three quarters of 2023. SBUX\u2019s operating margin during the fiscal nine months came in at 15.7%, up from 14.4% in the same period last year. The coffee giant saw a profit of $2.52 per share in the first three quarters of FY\u201923 compared to $2.07 in the same period last year.<\/p>\n

Interestingly, SBUX stock had a Sharpe Ratio of 0.4 since early 2017, which is lower than the figure of 0.6 for the S&P 500 Index over the same period. Compare this with the Sharpe of 1.2<\/strong> for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.<\/p>\n

Returning to the pre-inflation shock level means that Starbucks will have to gain about 31% from here. While it has the potential to recover to those levels, we estimate Starbucks\u2019 Valuation<\/strong> to be around $109 per share, almost 13% higher than the current market price. It is important to keep an eye on freight rates as rising fuel costs could be a risk moving forward. Our detailed analysis of Starbucks\u2019 upside post-inflation shock<\/strong> captures trends in the company\u2019s stock during the turbulent market conditions seen over 2022 and compares these trends to the stock\u2019s performance during the 2008 recession.<\/p>\n

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2022 Inflation Shock<\/strong><\/p>\n

Timeline of Inflation Shock So Far:<\/p>\n