SBUX, Starbucks Corporation
Formed in 1985, Starbucks Corporation's common stock trades on the Nasdaq Global Select Market under the symbol "SBUX." We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea, and other beverages and a variety of high-quality food items through…
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- A retailer, earning thin margins on high volume where inventory turns and scale decide the outcome.
- What moves the needle
- Sales per store and how fast inventory moves. What decides it: same-store sales, inventory turns, and whether thin margins survive a price war.
- Is it a good business?
- Return on capital has run high across the record (median 50%, above 15% in 10 of 10 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. The steadier read is owner earnings: roughly 10% of revenue reaches owners as cash, consistently. High, durable returns can mark a moat, but whether this one is real pricing power or an accounting artifact is the judgment the 10-K is for.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →27% of revenue comes from outside the United States.
- United States73%$27.1B
- International19%$6.9B
- China9%$3.2B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $21.3B | $22.4B | $24.7B | $26.5B | $23.5B | $29.1B | $32.3B | $36.0B | $36.2B | $37.2B | $38.5B |
| Gross marginGross mgn | 60% | 68% | 68% | 68% | — | — | — | — | — | — | 78% |
| Operating marginOp. mgn | 19.6% | 18.5% | 15.7% | 15.4% | 6.6% | 16.8% | 14.3% | 16.3% | 15.0% | 7.9% | 7.6% |
| Net incomeNet inc. | $2.8B | $2.9B | $4.5B | $3.6B | $928M | $4.2B | $3.3B | $4.1B | $3.8B | $1.9B | $1.5B |
| EPS (diluted)EPS | $1.90 | $1.97 | $3.24 | $2.92 | $0.79 | $3.54 | $2.83 | $3.58 | $3.31 | $1.63 | $1.31 |
| Owner earningsOwner earn. | $3.3B | $2.7B | $10.0B | $3.2B | $114M | $4.5B | $2.6B | $3.7B | $3.3B | $2.4B | $2.7B |
| Owner earnings marginOE mgn | 15.3% | 12.2% | 40.3% | 12.2% | 0.5% | 15.6% | 7.9% | 10.2% | 9.2% | 6.6% | 7.1% |
| ROICROIC | 38% | 40% | 164% | 146% | 33% | 135% | 58% | 61% | 50% | 27% | 52% |
| Cash & investmentsCash+inv | $3.4B | $3.2B | $9.2B | $3.0B | $4.8B | $6.9B | $365M | $402M | $257M | $247M | $3.6B |
| Net debt / (cash)Net debt | $180M | $699M | $235M | $8.2B | $11.1B | $7.7B | $14.5B | $15.0B | $15.3B | $15.8B | $11.4B |
Owner’s Scorecard
Will it survive?
- ComfortableOperating income $2.9B ÷ interest expense $543M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- HeavyTotal debt $16.1B ÷ operating income $2.9B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $9.4BMeaningful net debtCash $6.5B + ST investments $247M − debt $16.1B
Netting $6.7B of cash and short-term investments against $16.1B of debt leaves $9.4B owed, about 3.2× a year's operating profit, versus the gross figure above. It also holds $282M in longer-dated marketable securities; counting those, it sits at $9.1B of net debt. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- TightDSO 13 + DIO 94 − DPO 79 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- ExceptionalNOPAT $2.2B ÷ invested capital $1.5B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $2.4B = operating cash $4.7B − capex $2.3B
What an owner could take out without starving the business. That's 7% of revenue. Treating stock comp as the real expense it is (less $318M of SBC) leaves $2.1B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $4.7B ÷ net income $1.9B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns most of itDividends + buybacks $2.8B ÷ Owner Earnings $2.4B
Of $2.4B Owner Earnings, $2.8B (113%) went back to shareholders, $2.8B dividends, $0 buybacks. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 1.30×ExpandingCapex $2.3B ÷ depreciation $1.8B
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 10 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 20% (FY2016) → 8% (FY2025)
Margins slipped over the record, competition or costs are biting in.
- Reinvestment, incremental ROIC 29%
Every extra dollar the company reinvested earned a high return, it is still compounding, not coasting on an old moat.
- Owner earnings growth −0%/yr
Free cash to owners shrank about 0% a year over the record.
- Worst year 2020 · 6.6% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count −2.9%/yr
The share count is shrinking, buybacks are quietly growing your slice of the business.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $54.8B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a mature cash machine, most of what it earns goes straight back to owners.
- Reinvested$19.0B · 35%
- Dividends$20.2B · 37%
- Buybacks$29.4B · 54%
It reinvested $19.0B (35%) back into the business and returned $49.6B (91%) to owners, $20.2B in dividends, $29.4B in buybacks. Total debt rose $11.5B across the span. It returned and reinvested more than it generated, the gap was covered by debt or existing cash.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$318M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 11% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
3 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $37.2B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 0.72×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $16.1B vs ($2.8B) WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −5%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $1.63/share and book value $-7.10/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Starbucks Corporation has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $2.7B on 1143M diluted shares; net debt $11.4B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionRisk Factors
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“Additionally, there is intense competition for qualified technology systems developers, who are necessary to develop and implement new technologies for our growth initiatives, including increasing our digital relationships with customers.”
From the recordOperating margin7.6% now (TTM), off a 19.6% peak (FY2016) - Supplier & input dependenceRisk Factors
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“For certain products, we depend on a limited number of suppliers, and their failure to meet our standards, deliver on time, or comply with regulations—factors often beyond our control—could materially harm our operations and financial results.”
From the recordGross-margin cushion (TTM)78% - Concentrated dependenceBusiness
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Both the premium and the commodity price depend upon the supply and demand at the time of purchase.”
From the recordOwner-earnings margin at stake (TTM)7% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“Upon the occurrence of any event of default under the 2025 credit facility, interest on the outstanding amount of the indebtedness under the 2025 credit facility will bear interest at a rate per annum equal to 2% in excess of the interest then borne by such borrowings.”
From the recordBalance sheet (TTM)$9.4B meaningful net debt · interest covered 5.4× - Litigation & contingenciesRisk Factors
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“Unauthorized access, theft, or destruction of data or any breach, ransomware attack or other incident affecting our systems—whether through external attacks or internal methods—could result in reputational harm, loss of customers, business disruption, regulatory investigations, litigation (including…”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“If one or more of these international markets fail to achieve stable revenues and earnings—due to economic downturns or other factors—our consolidated results could be materially impacted.”
From the recordWorst year on record6.6% operating margin (FY2020) - Regulation & policyRisk Factors
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Separately, the OECD's Pillar Two initiative establishes a 15% global minimum tax for multinational entities.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “Consolidated net revenues increased 3% to $37.2 billion in fiscal 2025 compared to $36.2 billion in fiscal 2024, primarily driven by incremental revenues from net new company-operated stores over the past 12 months, an increase in revenue in the Global Coffee Alliance, and incremental revenue from t…”
- “Operating margin contraction of 710 basis points was primarily due to restructuring costs ass ociated with the closure of coffeehouses and simplification of our support organization (approximately 240 basis points) , deleverage (approximately 210 basis points), investments in support of "Back to Sta…”
- “Following our Green Apron Service model going live across our full U.S company-operated store portfolio in the fourth quarter of fiscal 2025, we are focused on empowering coffeehouse leaders to take ownership of sustaining the model as our permanent way of working, which we expect to enhance the cus…”
- “In support of our "Back to Starbucks" strategy, we completed our assessment of our coffeehouse portfolio late in the fourth quarter and made decisions to close stores that did not demonstrate a viable path to profitability, or meet our standards of delivering a warm, welcoming space for our customer…”
- “Such initiatives include improving our service model, and further transforming our non-retail support organization; enhancing partner investment to improve customer experience; closing, renovating, and redesigning coffeehouses; strengthening our leadership in coffee; expanding digital engagement thr…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Restaurants
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| SBUXStarbucks Corporation | $37.2B | 77% | 7.9% | 143% | 7% |
| MCDMcdonald’s Corporation | $26.9B | — | 46.1% | 26% | 27% |
| DRIDarden Restaurants, Inc. | $12.1B | 59% | 11.3% | 29% | — |
| CMGChipotle Mexican Grill, Inc. | $11.9B | — | 16.2% | 60% | 12% |
| YUMYum! Brands, Inc. | $8.2B | 70% | 31.3% | 49% | 20% |