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Starbucks - AI Stock Analysis

Analysis generated February 26, 2025

Starbucks Corporation, a global leader in the coffeehouse industry, operates over 31,000 locations worldwide. Founded in 1971, Starbucks has cultivated a beloved brand characterized by premium coffee and customer-centric service. The company has diversified its product offerings to include teas, snacks, and ready-to-drink beverages, maintaining a robust presence in retail locations and grocery stores. Recent innovations and digital transformations have further positioned Starbucks as a dominant player in global markets, leveraging app-based ordering and loyalty programs to enhance customer engagement and streamline operations.

Fundamental Analysis

Revenue for the last quarter stood at $8.81 billion, marking a modest increase of 2.93% compared to the previous quarter. While this growth is promising, it's essential to note the year-over-year decline of 3.86%, which could signal potential headwinds in maintaining market momentum. Net income for the last quarter was $745 million, reflecting a quarter-over-quarter decrease of 3.57%. More significantly, net income dropped by 34.76% compared to the same quarter last year, highlighting a substantial decline in profitability.

EBITDA for the last quarter was $1.57 billion, up 4.05% from the previous quarter but down 19.59% year-over-year. This mixed performance suggests underlying operational challenges despite short-term improvements. The current P/E ratio of 36.51 could be interpreted as an overvaluation, suggesting that the stock may be priced higher than its intrinsic value, leading to a potentially bearish outlook.

Technical Analysis

Today's stock price of $113.99 represents a significant increase of 15.98% compared to a month ago, indicating a robust short-term trend. The long-term outlook also appears favorable with a 24.19% increase from the previous year. The bullish trend is further supported by the current SMA10 of 112.84, slightly higher than the previous SMA10 of 112.70, suggesting a gradual upward momentum.

The Relative Strength Index (RSI) stands at 40.7, indicating a neutral condition. The absence of extreme values in the RSI suggests that the stock is neither overbought nor oversold at the moment, therefore not signaling immediate buying or selling pressures.

Alternative Data Analysis

Analyzing job postings and employee sentiment yields mixed results. Starbucks currently has 2,000 open positions, which have decreased by 85% over the last couple of months. This significant reduction may indicate efforts to cut costs and improve margins, a potential red flag for a growth-oriented company. Employee sentiment regarding the business outlook remains neutral.

In terms of customer acquisition, Starbucks sees an estimated 18 million webpage visitors with no significant change recently. However, there has been a 24% increase in daily mobile app downloads, now at 17,000, suggesting a growing customer base through digital channels—an optimistic sign.

Customer engagement data is stagnant, with Instagram and Twitter followers at 18 million and 11 million, respectively, showing no recent increase. Lack of growth in these metrics could indicate waning consumer interest.

The AltIndex AI score for Starbucks is 24, which translates to a strong sell signal when combining fundamental, technical, and alternative data analyses. This score reflects the potential for declining performance based on current data trends.

Conclusion and Recommendation

In summary, Starbucks demonstrates a mixed financial and operational outlook. While there are short-term gains in revenue, EBITDA, and stock price, the significant year-over-year declines in revenue, net income, and EBITDA indicate potential long-term challenges. The high P/E ratio raises concerns about overvaluation.

Technically, the stock shows bullish short-term and long-term trends, supported by the SMA10 and neutral RSI. However, alternative data paints a cautious picture, with drastic reductions in job postings and stagnant social media engagement, despite growth in mobile app downloads.

Considering the comprehensive analysis, prospective investors and analysts should approach Starbucks with caution. While there are positive indicators, underlying issues and a bearish AI score suggest potential volatility and risk. It would be prudent to closely monitor upcoming financial reports and market conditions before making any investment decisions. A neutral to sell recommendation may be appropriate until more stable and positive trends emerge.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.