Starbucks: 3 Different Insiders Have Sold Shares This Month

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 |  About: Starbucks Corporation (SBUX), Includes: FARM, GMCR
by: Markus Aarnio

In this article, I will feature one services sector stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Starbucks (NASDAQ:SBUX) operates as a roaster, marketer, and retailer of specialty coffee worldwide.

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Insider selling during the last 30 days

Here is a table of Starbucks' insider-trading activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Troy Alstead CFO Nov 25 114,807 No 100,545 shares + 125,905 options 33.6%
Clifford Burrows Group President Nov 25 35,000 No 102,006 shares 25.5%
Howard Schultz CEO Nov 21 557,000 No

18,784,468 shares + 566,469 options

2.8%
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There have been 706,807 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Starbucks' insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
November 2013 706,807 0
October 2013 0 0
September 2013 121,103 0
August 2013 471,608 141,573
July 2013 0 0
June 2013 63,385 0
May 2013 626,630 3,300
April 2013 20,000 0
March 2013 1,083,210 0
February 2013 58,000 0
January 2013 104,449 0
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There have been 3,255,192 shares sold and there have been 144,873 shares purchased by insiders this year.

Financials

Starbucks reported the fiscal 2013 full-year, which ended September 29, financial results on October 30 with the following highlights:

Revenue $14.9 billion
Net income $1.7 billion
Cash $3.2 billion
Debt $1.3 billion
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Outlook

Starbucks' guidance is as follows:

2014 revenue growth 10% or greater
2014 EPS $2.55-$2.65
Q1/2014 EPS $0.67-$0.69
Q2/2014 EPS $0.54-$0.55
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(Source: November 19 presentation)

Competition

Starbucks' competitors include Green Mountain Coffee Roasters (NASDAQ:GMCR), and Farmer Brothers (NASDAQ:FARM). Here is a table comparing these companies.

Company SBUX GMCR FARM
Market Cap: 61.51B 10.06B 320.78M
Employees: N/A 6,300 1,793
Qtrly Rev Growth (yoy): 0.13 0.11 0.08
Revenue: 14.89B 4.36B 519.37M
Gross Margin: 0.57 0.37 0.38
EBITDA: 2.86B 994.42M 31.93M
Operating Margin: 0.15 0.18 0.00
Net Income: 8.30M 483.23M -9.56M
EPS: 0.01 3.16 -0.61
P/E: 8,162.00 21.36 N/A
PEG (5 yr expected): 1.57 1.20 1.23
P/S: 4.12 2.19 0.62
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Starbucks has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
FARM 6,449 163,458
GMCR 39,000 1,090,450
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Only Starbucks has seen intensive insider selling during the last 30 days.

Conclusion

There have been three different insiders selling Starbucks and there have not been any insiders buying Starbucks during the last 30 days. Two of these three insiders decreased their holdings by more than 10%. Starbucks has an insider ownership of 2.60%.

Starbucks is trading at a P/E ratio of 8,162.00 and a forward P/E ratio of 25.70. The company has a book value of $5.96 per share and the stock has a dividend yield of 1.27%.

Before entering short Starbucks, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.