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Is Starbucks ready to start brewing again?

|Includes: MCD, Starbucks Corporation (SBUX)

Starbucks is currently valued at ~$10 billion off from $29 billion in Q206.

The price to sales ratio stands out as one indicator that may be worth watching if you are considering SBUX.  We compared the PSR of SBUX to MCD to see how these have trended over the last 10 years.  Starbucks has historically traded at a higher PSR but this changed in 2007.  McDonald’s currently trades at less than times sales and SBUX is near a historic low of 1 times sales.

Starbucks revenue growth has slowed dramatically from the 20% YoY range to negative growth in Q109.

“During the second quarter, we began to see signs of traction from the cost reduction and customer-facing initiatives we’ve undertaken over the past year,” said Howard Schultz, chairman, president and ceo. “Our focus on delivering value while staying true to the premium quality and values of the brand, is paying off,” added Schultz. “Our recent introduction of Starbucks VIATM Ready Brew is a notable case in point and is showing significant promise in multiple channels.”

The question is whether SBUX can get back to the glory days or reinvent itself in the new cost conscious environment that most consumers find themselves in.

 

Starbucks Stock Charts