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RIIQ Pro Newsletter

More robust content and deep insights & analysis related to Investing reserved for Raising InvestorIQ premium subscribers

Good morning investors!

Every Monday morning we publish “RIIQ Deep-Dive Analysis” — a deep-dive article on a specific company, with analysis covering its competitive position, financial performance, valuation, and future outlook, among other things. Members get to learn about the nuances that may make these companies solid long-term, value-oriented investment opportunities. 

Grab your coffee and let’s dive in!

Preview

New Starbucks CEO Brian Niccol has identified several areas where Starbucks needed to step up its game. He’s got a four-part strategy to get Starbucks back on track, and we discuss and dissect this strategy in detail. His mission – to bring Starbucks back to its winning ways.

Now, let's get into the numbers—because that’s what potential investors are really interested in.

When Starbucks announced Niccol’s appointment, the stock market took notice. The company’s shares soared by +24%, adding roughly $20 billion to Starbucks' market cap. The company remains highly profitable, with a gross margin of 27% in June 2024, indicating that despite sales drops, Starbucks is still operating efficiently.

Additionally, despite its recent challenges, key profitability ratios paint a beautiful picture, with return on assets (ROA) maintaining at a level greater than 5% and more recently at 12%.  Its total returns on invested capital (ROIC) have also averaged at very attractive levels of 24%, while more recently exceeding 30%. 

These are excellent indicators of efficient use of assets and capital, and the levels being experienced are consistent with what we generally want to see of profitability ratios in companies with excellent business economics.

And for income-focused investors, Starbucks has consistently delivered reliable dividends. The company currently offers a dividend yield of 2.31%, with an annual payout of $2.28 per share. This stability is one of the reasons why Starbucks remains attractive to long-term investors, even as it faces short-term challenges.

Upgrade to read the full-write-up and determine if Brian Niccol’s entrance marks a prime opportunity to take a position in Starbucks.

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