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 sharp -50.6% decline in net income and -50.8% drop in diluted EPS in FY2025 drove a low growth sub-score, which weighed heavily on the composite score of 42.2/100.
- The unsustainably high dividend payout ratio of 149.3% and the absence of any macro theme assignment both constrained the composite, as neither the dividend nor thematic tailwind factors contributed meaningfully.
- Partial offsets came from the financial health factor, where a 5.4x interest coverage ratio and $32,019,700,000 in total assets supported a higher sub-score despite negative book equity.
Why Not Higher
- Earnings deterioration dominates the scorecard: net income fell -50.6% and EPS fell -50.8% in FY2025, and the quarterly recovery through 2026Q2 has not restored profitability to prior levels.
- The dividend payout ratio of 149.3% and the lack of any assigned macro theme meant two factors provided limited positive contribution to the overall score.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew modestly from FY2024 to FY2025, rising +2.8% to $37,184,400,000, but net income fell -50.6% from FY2024 to FY2025 (from $3,760,900,000 to $1,856,400,000), and diluted EPS declined -50.8% over the same period (from $3.31 to $1.63).
The model penalized the sharp contraction in earnings and EPS, which far outweighed the modest top-line gain, resulting in a low growth sub-score.
In FY2025, Starbucks reported a net margin of 5.0%, an operating margin of 7.9%, and a return on assets of 5.8%.
These margins reflect a business that remains profitable but at relatively thin levels, which the model rewarded partially while limiting the score due to the modest absolute returns.
In FY2025, Starbucks carried a debt-to-equity ratio of -1.99 (reflecting negative book equity), an interest coverage ratio of 5.4, and total assets of $32,019,700,000.
The model appears to have rewarded the company's ability to cover interest obligations at 5.4x and its substantial asset base, while the negative equity figure reflects a structural characteristic of the balance sheet rather than an immediate solvency concern under the model's methodology.
Over the last four quarters, revenue moved from $9,456,000,000 in 2025Q3 to $9,569,000,000 in 2025Q4, rose to $9,915,100,000 in 2026Q1, then pulled back to $9,531,500,000 in 2026Q2. Operating income showed a sharp trough of $278,300,000 in 2025Q4, recovering to $890,800,000 in 2026Q1 and $828,100,000 in 2026Q2, while net income similarly troughed at $133,100,000 in 2025Q4 before recovering to $510,900,000 in 2026Q2.
The pattern shows a significant earnings dip in 2025Q4 followed by partial recovery, but the most recent quarter's revenue decline from the 2026Q1 peak and still-subdued profitability relative to earlier periods limited the momentum score.
In FY2025, Starbucks's dividend payout ratio stood at 149.3%, meaning dividends paid exceeded net income. Dividends per share have risen steadily from $2.00 in FY2022 to $2.16 in FY2023, $2.32 in FY2024, and $2.45 in FY2025.
The model recognized the consistent dividend growth trend but penalized the unsustainably high payout ratio of 149.3% in FY2025, which signals that the current dividend level is not covered by earnings, constraining the overall dividend sub-score.
Starbucks is not currently assigned to any of the 24 tracked macro themes in the model.
The absence of a theme assignment means no thematic tailwind contributed to the score; this reflects the model's current classification state and is not itself a positive or negative signal about the company's business.
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 posted modest revenue growth of +2.8% to $37,184,400,000 in FY2025, but net income fell -50.6% to $1,856,400,000 and diluted EPS dropped -50.8% to $1.63, reflecting a sharp earnings contraction that dominated the growth picture. Profitability remains positive but thin, with a net margin of 5.0% and operating margin of 7.9%, while the balance sheet shows an interest coverage ratio of 5.4x and a large asset base of $32,019,700,000 despite negative book equity. The dividend payout ratio of 149.3% signals that dividends are not currently covered by earnings, and quarterly momentum shows a significant trough in 2025Q4 followed by only partial recovery. The composite score of 42.2/100 reflects these offsetting dynamics, earning a Monitor Only label.
Plain English
Starbucks is still bringing in more revenue each year, but its profits dropped by about half in FY2025, its dividend costs more than it earns, and while things improved a bit recently after a rough quarter, the overall picture is shaky enough that the model says to keep an eye on it rather than act.
Bull Case vs. Bear Case
Bull Case
- Starbucks maintains a meaningful asset base of $32,019,700,000 and covers its interest obligations at 5.4x, suggesting the business retains financial capacity to navigate its current challenges.
- Revenue has continued to grow, rising +2.8% to $37,184,400,000 in FY2025, indicating the top line has not collapsed despite the earnings pressure.
- After a sharp earnings trough in 2025Q4 (operating income of $278,300,000), operating income recovered to $890,800,000 in 2026Q1 and $828,100,000 in 2026Q2, suggesting some stabilization in profitability.
Bear Case
- Net income fell -50.6% from $3,760,900,000 in FY2024 to $1,856,400,000 in FY2025, and diluted EPS dropped -50.8% from $3.31 to $1.63, representing a severe earnings deterioration that far outpaced modest revenue gains.
- The dividend payout ratio of 149.3% in FY2025 means dividends paid exceeded net income, raising sustainability concerns about the current dividend level.
- Revenue pulled back from $9,915,100,000 in 2026Q1 to $9,531,500,000 in 2026Q2, and net income of $510,900,000 in 2026Q2 remains well below earlier levels, indicating the recovery is incomplete.
What Could Change the Picture
Bullish Triggers
- A sustained multi-quarter recovery in operating income back toward the $935,600,000 level seen in 2025Q3, combined with earnings growth that brings the payout ratio back below 100%, would signal improving financial health.
- Consistent revenue growth re-accelerating beyond the current +2.8% annual pace, paired with margin expansion above the current 7.9% operating margin, would strengthen the growth and profitability outlook.
Bearish Triggers
- A renewed decline in quarterly operating income back toward the 2025Q4 trough of $278,300,000 would suggest the partial recovery has stalled and earnings pressure is worsening.
- Any further increase in the dividend payout ratio beyond 149.3% without a corresponding earnings recovery would heighten concerns about the long-term sustainability of the dividend.
Risk Profile
Low RiskStarbucks carries a debt-to-equity ratio of -1.99 reflecting negative book equity, though the model treats this as a structural balance sheet characteristic rather than an immediate solvency signal given the 5.4x interest coverage ratio. Quarterly momentum shows the business experienced a significant earnings trough in 2025Q4 and has only partially recovered, with 2026Q2 net income of $510,900,000 still well below the $558,300,000 reported in 2025Q3, leaving the near-term earnings trajectory uncertain.
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.