SBUX has low expected returns (5-6%) and high risk; not attractive at current price.

We haven't discussed Starbucks stock for a few years, and over the past few years , not much has happened to the stock. Now we have to see if Starbucks will return to what it once was, a machine of cumulative growth.

Because when you look at the past five years, you will find a 20% decline, and constant fluctuations between ups and downs. However, the market capitalization is 108 billion, the price-to- earnings ratio is 54, and the dividend yield is 2.61%.

So, let's discuss the return of Starbucks' new CEO after two years, the long-term financial data that will give us a good indication of our current situation, the view of Wall Street, the calculation of intrinsic value, and knowing where you fall in the investment square, and then you can make your own decision as to whether Starbucks is a suitable investment for you.

Going back to Starbucks, I remember going to one of its branches a few years ago and the place was really dirty. It wasn't a good place and that's something they need to change.

If he does that with Starbucks, I think all the shareholders will be very happy.

Sales at similar stores have started to improve over the past few quarters . Forecasts indicate a 6% growth rate in similar stores. Net revenue is growing slightly. They are selling their operations in China, and have obtained some liquidity from there.

Operating margins are improving, leading to improved earnings per share, especially in the last quarter. The goal is to return to what Starbucks was and what made it the brand it is today.

But there are also problems: union complaints, prices, staffing levels, and the difficult environment that has led to dirty Starbucks branches, at least in Europe, resulting in a decrease in the number of customers, a decrease in revenue, and all that entails.

They sold 60% of their stake in China, so it will be calculated differently now, It has been achieving cumulative growth, especially in the last 15 to 20 years.

If we look at the revenues, we will find an amazing growth rate, and profitable growth as well. Revenues, let's say, have increased sixfold. The profits from these averages to current potential profits, let's say, have multiplied eightfold.

For each share, perhaps a little more because they did some share buybacks. However, after these impressive margins, we saw 2025 with declining margins and shrinking gross profit margins.

Net income was around 4 billion in normal years. Now, in the past twelve months, it has reached 2 billion, but in the last quarter, and this is a quarterly chart, profit margins have returned to their historical levels, which could lead to an improvement in Starbucks' profitability.

4 billion times 1 equals 4 billion annually, which changes the picture if you look at it from this perspective. The price-to-earnings ratio is back in the twenties, and everything is normal.

Now, with regard to long-term debt, they decided around 2018 to use financial engineering, borrowing, and share buybacks.

There are dividend payouts, but they made two large buybacks, which drove the stock up in 2018-2019, but they executed most of the buybacks at high stock prices.

They spent 25 billion, and reduced the market value by 20% to 100 billion. There are no big wins there. Furthermore, the balance sheet is now highly indebted after having been completely debt-free.

Therefore, I am not at all a fan of financial engineering. You really need to be careful about what you do . This situation is not pleasing to Wall Street analysts. When you see most people saying "hold," holding on Wall Street means "sell."

" Strong selling" means " short selling". " Strong buying" represents only 12. Therefore, there is a weakness among analysts.

Analysts don't like a stock to remain stagnant for 5 years. They were promoting it and then things got worse, and there is little improvement as you can see that they are only following the stock price.

But they are optimistic, especially about earnings, with 20% future growth, reaching three, and possibly four per share in 2028, and targeting a price-to- earnings ratio of 25.

If we look at Starbucks' "Investor Day" targets, they are aiming for 3.45 or 4 by 2028.

The investment narrative is: if Starbucks really comes back, and if they can profitably increase the number of stores and grow profitably, then it could be an interesting brand.

And here I have Starbucks. Dividends were taken as an entry criterion because it is a dividend-paying company and we hope it will be a dividend-paying growth company .

If I set a dividend growth rate of 5%, I would expect a discount rate of 10%, and a lower yield of 10%. The ultimate multiplier is 25, which means an expected dividend yield of 4%.

The intrinsic value is still far from the current share price .

What is the current price for a 10% return ? Well, maybe not 10%, but maybe the market is satisfied with 6%. Then, we price a future dividend yield of 4%, a discount rate of 6%, and so on we arrive at the result .

Therefore, you can expect a long-term return of around 6% from Starbucks at current prices. Of course, if the dividend yield is 3% and the market is satisfied with this percentage, then we are already facing an expected yield of 8% at current prices with dividend growth rates of 7%.

In the worst-case scenario , with a dividend yield of 5 %, which is not impossible, and growth of only 4%, the stock needs to fall by 50%.

She would say, "No, Sven , 5% is insane for a brand of this quality." So, when it comes to Starbucks, yes, everything is great, but the return is low and the risk is high.

I put it here, a potential return of 5 to 6% in the future with a high risk of the required return increasing , which will result in a decrease in your actual return.