The Tea and Coffee Shops industry has a market cap of $196,749.6 million of which
$110,485.28 million is Starbucks Corporation (Standard & Poor’s NetAdvantage). The total
enterprise value (TEV) of the Tea and Coffee Shops Industry is $243,719.8 million (Standard &
Poor’s NetAdvantage).
Starbucks is the leading company in the Tea and Coffee Shops industry. Its current share
price is $96.46 with 1,145.40 million share outstanding. This puts the market capitalization at
$110,485.28 million (Brealey, R., Marcus, A., & Myers, S., pg 48, 2023). The annual revenue for
2022 was $32.25 billion which was a 10.98% increase from the previous year. Net income did
decrease from 2021 to 2022 from 4.2 billion to 3.28 billion but is increasing for 2023. They also
had earnings per share of 2.96 for 2022. The company had high liabilities of $36,677.1 million
for 2022 compared to assets of $27,978.4 million and equity of -$8,698.7 million. The P/E ratio
currently is 29.38.
The compound annual growth rate of the coffee market is expected be 5.12% from 2023
to 2030 (Contrive Datum Insights Pvt Ltd, 2023). The tea and coffee industry is expected to
grow over the next several years. Starbucks expects its earnings per share to increase 15-20% in
the next three years. They have also made a return from the sales drop in 2020.
Starbucks would be a good company to invest in if you are okay with some risk.
Starbucks is the leading company in its industry. It makes up over half of the Tea and Coffee
industry. It has a high market capitalization at $110,485.28 million with a stock price of $96.46.
Their annual revenue has also continued to increase over the past several years with an increase
of 10.98% from the previous year. While its net income did decrease for 2022, it is increasing for
the year 2023. They had good earnings per share of 2.96 and a P/E ratio of 29.38. The risks with
investing in Starbucks in that they have high liabilities, especially when compared to their assets
References
Brealey, R., Marcus, A., & Myers, S. (2023). Fundamentals of Corporate Finance (11th ed.).
New York, NY: McGraw Hill LLC.
Contrive Datum Insights Pvt Ltd. Coffee Market is Expected to Reach around USD 143,828.7
Million by 2029. Yahoo Finance. Retrieved from: https://finance.yahoo.com/news/coffee-
market-expected-reach-around-185400232.html
Standard and Poor’s NetAdvantage. Retrieved from: https://www-capitaliq-
com.eu1.proxy.openathens.net/CIQDotNet/Financial/BalanceSheet.aspx?
CompanyId=34745
and equity. This shows that they have a lot of debt compared to the amount of assets and
shareholders’ equity they have. They have an asset deficiency of almost $10,000 million. With
this comes risk that they may not be able to get their debt down and are at risk of going bankrupt.
They also have negative equity which is also a red flag for investing. They did take on a lot of
debt during the pandemic in 2022, and it seems to be decreasing slowly annually. Since Starbuck
is the leader in the industry, they could be a good investment for any investor if the investor is
okay with a little risk.
