Investment Thesis
Starbucks exhibits severe financial distress despite revenue growth, with negative stockholders' equity of -$8.5B and failing liquidity metrics (current ratio 0.92x, quick ratio 0.73x). The 50.8% EPS collapse alongside flat net income signals massive shareholder dilution, while thin 4.1% net margins and $15.1B debt provide minimal buffer against operational deterioration.
Strengths
- Positive operating cash flow of $2.0B and free cash flow of $1.4B demonstrate operational viability
- Revenue growth of 2.8% YoY reflects sustained market demand and brand strength
- Interest coverage ratio of 6.2x indicates current ability to service debt obligations
Risks
- Negative equity of -$8.5B with current ratio 0.92x and quick ratio 0.73x creates critical solvency and liquidity risk
- Diluted EPS declined 50.8% YoY despite flat earnings, indicating aggressive share dilution or destructive capital allocation
- Thin 4.1% net margin combined with $15.1B debt burden against $1.5B cash leaves negligible financial flexibility
Key Metrics to Watch
- Stockholders' equity trajectory and working capital recovery
- Earnings per share growth independent of share count changes
- Operating margin sustainability and debt reduction progress
Financial Metrics
Revenue
19.4B
Net Income
804.2M
EPS (Diluted)
$0.70
Free Cash Flow
1.4B
Total Assets
30.6B
Cash
1.5B
Profitability Ratios
Gross Margin
N/A
Operating Margin
8.8%
Net Margin
4.1%
ROE
N/A
ROA
2.6%
FCF Margin
7.0%
Balance Sheet & Liquidity
Current Ratio
0.92x
Quick Ratio
0.73x
Debt/Equity
N/A
Debt/Assets
127.7%
Interest Coverage
6.23x
Long-term Debt
15.1B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T13:49:37.434127 |
Data as of: 2026-03-29 |
Powered by Claude AI