Starbucks’ year-to-date returns

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Starbucks’ year-to-date returns are down

As of November 2014, Starbucks’ (SBUX) year-to-date return was 3.3%, compared to returns of 10.9% on the Standard & Poors (or S&P) 500 Index and 9.5% on the restaurant segment. Without Tim Hortons (THI), the average returns for the below peers was only 0.4%.

Comps 2014-11-29

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Comparative analysis

The above companies are Starbucks’ (SBUX) closest competitors. The average price earnings (or P/E) ratio for the above peers for the next 12 months is 24.3x, compared to the P/E of 27.7x for the last 12 months. The market anticipates that the earnings will be higher for this peer group over the next one-year period. Comparing Starbucks NTM P/E of 25.6x with the industry average P/E of 23.3x indicates that the company is overvalued. However, be aware that the average is pulled down by McDonald’s and Yum! Brands, which offer fast food as well as breakfast and coffee products. This industry is losing its market share to fast-casual restaurants.

Nearly all the restaurants on the chart above returned below the S&P 500. To learn more about recent earnings for McDonald’s (MCD) and Yum! Brands (YUM), read the following:

  • Why McDonald’s 3Q14 earnings were disappointing
  • Overview: Yum! Brands’ 3Q14 earnings

Restaurant stocks fall under the consumer discretionary sector and are components of exchange-traded funds (or ETFs) like the Consumer Discretionary Select Sector Standard & Poors depositary receipt (or SPDR) fund (XLY). This ETF had a year-to-date return of 2.9%.

Further reading

You can also read the following business and earnings overviews for other companies:

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