SBUX
Starbucks Corporation
Consumer Cyclical · Restaurants · United States · Stock
Score Breakdown
Scored for Safe Long-Term Investing profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The overall model score of 42.2/100 is primarily anchored by the financial_health sub-score of 16.0/20, which prevents the score from falling lower by reflecting Starbucks' balance sheet scale and debt serviceability from the FY2025 10-K.
- The profitability sub-score of 9.2/20 contributes meaningfully to the total score, as Starbucks' net and operating margins remain above typical restaurant-sector averages despite recent top-line pressure.
- The combination of a 6.0 growth score and 7.8 momentum score caps the total below 50, as the model penalizes companies showing year-over-year earnings and revenue contraction without clear sequential recovery signals in the filing data.
Why Not Higher
- The growth sub-score of 6.0/20 is a severe drag on the composite score, directly reflecting filing-documented declines in revenue growth, net income, and EPS on a year-over-year basis that the model weights heavily for a Safe Long-Term Investing profile.
- The theme sub-score of 0.0/20 provides zero additive points, as the model found no macro theme exposures in the FY2025 filing — a category that can add up to 20 points for companies with qualifying strategic exposures — leaving Starbucks with a structural ceiling on its total score.
Data Confidence
10 / 10
Very High — full data coverage
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Starbucks Corporation is the world's largest coffeehouse chain, operating tens of thousands of company-owned and licensed stores globally under the Starbucks brand, as well as through segments including North America, International, and Channel Development. The company generates revenue through beverage and food sales, licensed store royalties, and packaged consumer goods. Against a Safe Long-Term Investing goal profile, the model assigned Starbucks a score of 42.2/100, reflecting a business with genuine profitability strengths but meaningful structural and balance sheet concerns that limit overall confidence in its long-term compounding profile. The profitability sub-score of 9.2/20 acknowledges solid operating margins and returns typical of a scaled global food-service brand, while the financial_health sub-score of 16.0/20 — the strongest dimension — reflects the company's balance sheet size and interest coverage characteristics as reported in the FY2025 10-K filing. However, the growth sub-score of 6.0/20 signals that revenue and earnings momentum has been materially weak on a year-over-year basis, consistent with the widely documented traffic and comparable-store-sales pressures Starbucks has faced across its key markets. The momentum sub-score of 7.8/20 further indicates limited sequential improvement in revenues, earnings, or margins through the most recent fiscal quarters captured in the filing. The dividend sub-score of 6.2/20 raises questions about the sustainability or coverage of the dividend relative to free cash flow, and the theme sub-score of 0.0/20 means the model identified no qualifying macro theme exposures — such as AI, energy transition, or demographic tailwinds — that would support a speculative or thematic premium in the score. The core research tradeoff for Starbucks is between a recognizable, globally scaled brand with demonstrated profitability infrastructure and a current operational environment characterized by slowing growth, margin pressure, and a balance sheet that carries leverage. The model's 'Monitor Only' label reflects that while the business is not fundamentally broken, the FY2025 filing data does not yet support a stronger research case for a Safe Long-Term Investing profile.
Plain English
Starbucks is the company behind the famous green-logo coffee shops you see almost everywhere in the world. The model gave it a score of 42.2 out of 100, which is below average, because while the company is still profitable and has a large balance sheet, its recent growth has slowed significantly and its dividend coverage looks strained relative to free cash flow. The Medium risk rating means this is not a small or fragile business, but there are real operational and financial concerns that make it unsuitable for a 'set it and forget it' research stance right now. Researchers should watch for signs of a genuine turnaround in sales trends before revisiting this as a stronger candidate.
Bull Case vs. Bear Case
Bull Case
- The financial_health sub-score of 16.0/20 — the highest-scoring dimension in the model — indicates that Starbucks maintains a balance sheet of substantial size with interest coverage characteristics that suggest the company can service its debt obligations based on FY2025 filing data.
- The profitability sub-score of 9.2/20 reflects that Starbucks continues to generate meaningful net and operating margins relative to the broader restaurant sector, supported by its scaled global store network and high-margin beverage mix.
- The best scoring goal profile for Starbucks is Safe Long-Term Investing at 49.1, which suggests that among all available goal profiles in the model, a long-term research orientation captures the most value from the company's durable brand equity and global licensed store royalty streams.
Bear Case
- The growth sub-score of 6.0/20 is one of the weakest dimensions in the model and directly reflects filing-documented deterioration in year-over-year revenue, net income, and EPS, indicating the company is not currently in a growth phase.
- The momentum sub-score of 7.8/20 signals that sequential quarterly improvements in revenues, earnings, and margins have been limited or inconsistent through the periods captured in the FY2025 10-K, providing little near-term evidence of operational recovery.
- The dividend sub-score of 6.2/20 raises a specific concern about free cash flow coverage of the dividend, suggesting that based on FCF payout ratios and DPS growth metrics in the filing, the dividend program may be consuming a disproportionate share of available cash.
What Could Change the Picture
Bullish Triggers
- A demonstrated recovery in year-over-year comparable-store revenue and net income growth, as evidenced in a future annual 10-K filing, would materially improve the growth sub-score of 6.0/20 and could push the composite model score above 50.
- Evidence in a future filing of improved free cash flow coverage of dividends — reflected in a stronger FCF payout ratio and DPS growth trajectory — would raise the dividend sub-score above 6.2/20 and reduce one of the primary structural concerns flagged by the model.
Bearish Triggers
- Further deterioration in year-over-year revenue or net income in a subsequent 10-K filing, pushing the growth sub-score below 6.0/20, would lower the composite score and could shift the research label from Monitor Only to a weaker designation.
- A reduction in interest coverage ratios or a significant increase in leverage as reported in future filings would erode the financial_health sub-score of 16.0/20, which is currently the primary support for the model score, potentially causing a meaningful downward revision.
Red Flags
- The dividend sub-score of 6.2/20, combined with the low growth score of 6.0/20, suggests that Starbucks may be maintaining its dividend program at a level that strains free cash flow during a period of declining earnings, which is a structural tension flagged by the model.
- The theme sub-score of 0.0/20 indicates no macro theme exposure was identified in the FY2025 filing analysis, meaning there is no model-recognized secular tailwind supporting the business case beyond the company's own operational execution.
- The momentum sub-score of 7.8/20 combined with a growth sub-score of 6.0/20 together paint a picture of a business that has not only declined year-over-year but has also failed to show meaningful sequential recovery within the FY2025 reporting periods.
Risk Profile
Medium RiskThe Medium risk rating for Starbucks reflects that it is a large, established global operator with real profitability and a substantial balance sheet, which limits downside risk relative to smaller or less profitable businesses, but the combination of declining growth metrics, strained dividend coverage, and lack of macro theme exposure means operational risks are elevated enough to warrant active monitoring rather than passive long-term confidence.
Key Catalysts to Watch
The key catalysts to watch for Starbucks are evidence of a sustained reversal in comparable-store revenue and earnings trends as reported in future SEC filings, and any filing-documented improvement in free cash flow generation that would alleviate the tension between dividend maintenance and declining profitability growth.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.