$Starbucks(SBUX)$

With so many companies listed on the stock markets, it can be exciting and challenging at the same time to determine which company to invest. Investors have to study a number of fundamentals of the stock before buying. Some example of fundamentals are ratios such as ‘return on net worth’, ‘earnings per share’, ‘return on invested capital’, or the ‘price-to-book ratio’ amongst others that can help determine the value of the company’s stock.

The PB ratio helps the investor compare the market value of a particular company’s shares/ market capitalization to its book value.

The price-to-book (P/B) ratio has been favored by value investors and is widely used by market analysts. Traditionally, any value under 1 is considered a good P/B value, indicating a potentially undervalued stock.

Starbucks has a very negative price to book ratio of -10.03.

However, Starbucks' balance sheet is less-than-ideal. The company has a negative debt-to-equity ratio means that a company has more liabilities than assets, which is often a risky sign from an investor's standpoint. I like to invest in companies with strong balance sheets because they offer companies more flexibility to navigate through any economic situation.

Even though Starbuck is trading at all time low valuation basing on the negative P/B ratio, I will not consider to buy the stock based on their balance sheet.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment

  • Top
  • Latest
  • setia100
    ·2022-05-30
    It brews expensive coffees till it becomes blue chip. Can be considered when markets hit the ground 🤔
    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks for sharing 👍[Happy]
      2022-05-30
      Reply
      Report
  • CY Tan
    ·2022-05-30
    Starbucks is over its peak.
    Reply
    Report
    Fold Replies
  • 潘小明
    ·2022-05-30
    I don't like their business model
    Reply
    Report
    Fold Replies
    • Pluto891
      why?
      2022-05-30
      Reply
      Report
    • HelenJanet
      👍😊
      2022-05-30
      Reply
      Report
  • bwjx
    ·2022-05-30
    Thanks for sharing. Most companies in F&B have negative price to book value e.g. $McDonald's(MCD)$ $Yum(YUM)$ but that doesn't mean that they are unprofitable or bad businesses.
    Reply
    Report
    Fold Replies
    • HelenJanetReplying toSR050321
      Yeah. I happened to see P/B ratio of $Starbucks(SBUX)$ to be very negative which was my first time to see a negative number. Then I go check the balance sheet, also first time see so many red bars.
      2022-05-30
      Reply
      Report
    • HelenJanetReplying toSR050321
      I love Mcdonald’s food too.[Grin]
      2022-05-30
      Reply
      Report
    • HelenJanetReplying toSR050321
      Therefore I dare not buy the stock.
      2022-05-30
      Reply
      Report
    View more 3 comments
  • Pottsy
    ·2022-05-31
    A coffee is a nice to have rather than a must have. As belts tighten I can see some of this spending being reduced from households
    Reply
    Report
    Fold Replies
    • HelenJanet
      I agree with you Starbuck coffee ☕️ is very expensive and the price of 1 coffee is equivalent to a normal hawker centre meal.
      2022-05-31
      Reply
      Report
  • Woobenny
    ·2022-05-30
    Agree with the balance sheet, but SB has always relied on customer’ loyalty and branding. So I think it will still thrive in this environment.
    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks for your comments and support 👍😊
      2022-05-30
      Reply
      Report
  • ChernTiong
    ·2022-05-31
    will hold on to what I had. not considering to add anymore atm
    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks for your comments. I may not be correct as it is a personal judgement. Hope the stock price will continue to go up and give all investors good dividends. All the best to you. 👍
      2022-05-31
      Reply
      Report
  • 88wlam88
    ·2022-05-30
    Great elaboration, rather surprised to see the negative debt-to-equity ratio…
    Reply
    Report
    Fold Replies
    • HelenJanetReplying toHelenJanet
      that the companies are unprofitable or bad businesses. As I don’t have any knowledge of accounting, so I am also not very sure.
      2022-05-30
      Reply
      Report
    • HelenJanet
      I was also surprise too, but one tiger friend has shared with us that most F&B companies have negative price to book value e.g. $McDonald's(MCD)$ $Yum(YUM)$ and he mentioned that doesn't mean
      2022-05-30
      Reply
      Report
  • Matrix Rev
    ·2022-05-30
    What stocks would you like?
    Reply
    Report
    Fold Replies
    • HelenJanet
      I like good and strong blue chip stocks with good dividends.
      2022-05-30
      Reply
      Report
  • Lao Tzu Ang
    ·2022-05-30
    Thanks for the analysis.
    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks for your support 👍[Happy]
      2022-05-30
      Reply
      Report
  • Worpeng2002
    ·2022-05-31
    thanks for sharing
    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks for your support 👍[Happy]
      2022-05-31
      Reply
      Report
  • Karma Rider
    ·2022-05-31
    從來都沒有看過那麼厲害的PO文!
    Reply
    Report
    Fold Replies
    • HelenJanet
      谢谢你的支持,很感动。👍[Happy]
      2022-05-31
      Reply
      Report
  • jethro
    ·2022-05-30
    thanks for the heads up
    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks for your support 👍😊
      2022-05-30
      Reply
      Report
  • HzxS
    ·2022-05-30
    Yes i like starbucks coffee 🤣
    Reply
    Report
    Fold Replies
    • HelenJanet
      ☕️👍😊
      2022-05-30
      Reply
      Report
  • jipbu
    ·2022-05-30

    [Like] 

    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks 👍😊
      2022-05-30
      Reply
      Report
  • Iron man
    ·2022-05-30
    Tanks for sharing
    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks 👍😊
      2022-05-30
      Reply
      Report
  • RXU
    ·2022-05-31
    HMMM why its liabilities more than assets? has been ard for so long
    Reply
    Report
    Fold Replies
    • HelenJanet
      Sorry I also don’t know as I don’t have any accounting knowledge. May be I am not correct as it is a personal judgement. Thanks 😊
      2022-05-31
      Reply
      Report
  • Vgreen
    ·2022-05-31

    [Cool] 

    Reply
    Report
    Fold Replies
    • HelenJanetReplying toVgreen
      Thanks for your big support 👍[Happy]
      2022-05-31
      Reply
      Report
    • Vgreen
      [Miser]
      2022-05-31
      Reply
      Report
    • Vgreen
      [Happy] [Happy] [Happy]
      2022-05-31
      Reply
      Report
    View more 13 comments
  • Barbarazhao
    ·2022-05-31
    Good to read. Tq
    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks for your support 👍😊
      2022-05-31
      Reply
      Report
  • whitewolf69
    ·2022-05-31
    thanks for the article
    Reply
    Report
    Fold Replies
    • HelenJanet
      Thanks for your support 👍[Happy]
      2022-05-31
      Reply
      Report