Investors who have owned stocks in the last year have generally experienced some decent gains. In fact, the SPDR S&P 500 ETF Trust (NYSE: SPY) total return over the past 12 months is 21%. But there is no question some big-name stocks performed better than others along the way.
Starbucks’ Bumpy Ride: One company that has been a disappointing investment in the last year has been coffee giant Starbucks Corporation (NASDAQ: SBUX).
The restaurant industry was hit hard by the COVID-19 pandemic in 2020. Fortunately for Starbucks investors, the company was relatively well-positioned to weather the storm.
The pandemic negatively impacted higher-end fine dining and casual dining restaurants more than quick-service restaurants. Starbucks also had a head start on competitors with its digital sales infrastructure and its drive-thru services.
At the beginning of 2020, Starbucks shares were trading at around $88. By the beginning of March, the stock was down to $77.92 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
Starbucks bottomed at $50.02 during the pandemic-driven March sell-off. Fortunately for Starbucks investors, the dip did not last long.
By December, Starbucks shares were back at new all-time highs above $100, and the stock got as high as $126.32 in July 2021 prior to an extended consolidation period.
Starbucks In 2022, Beyond: Starbucks has since drifted back down to around $98. Traders may be taking profits in the stock following its rally off of 2020 lows. Or they may simply see the company’s potential reopening rebound as fully priced into shares at a forward PE of 24.3
In the fiscal fourth quarter, Starbucks reported a 22% same-store sales growth in the U.S. and a 7% drop in same-store sales growth in China, the company’s two largest global markets.
In addition, the company reported 51% of its customers were reward members in the quarter, suggesting Starbucks is building a loyal customer base. This membership includes the 17.9 million active rewards members in China, up 33% from a year ago and 24.8 million active rewards customers in the U.S., up 30% year-over-year.
Starbucks also plans to continue to expand its footprint in 2022 by opening 2,000 new locations this year.
Unfortunately, Starbucks investors who bought one year ago and held on have generated a lackluster return on their investment. In fact, $1,000 in Starbucks stock bought on January 31, 2021, would be worth about $1,021 today, assuming reinvested dividends.
Looking ahead, analysts are expecting more upside for Starbucks in the next 12 months. The average price target among the 29 analysts covering the stock is $122, suggesting a 24.7% upside from current levels.
Photo: Courtesy Starbucks
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