Starbucks (SBUX) and Luby’s (LUB) Financial Survey

Starbucks (NASDAQ: SBUX) and Luby’s (NYSE:LUB) are both cyclical consumer goods & services companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, valuation, dividends, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Starbucks and Luby’s, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Starbucks 0 10 18 1 2.69
Luby’s 0 0 0 0 N/A

Starbucks currently has a consensus target price of $63.25, indicating a potential upside of 6.87%. Given Starbucks’ higher possible upside, equities research analysts clearly believe Starbucks is more favorable than Luby’s.

Volatility & Risk

Starbucks has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, Luby’s has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Dividends

Starbucks pays an annual dividend of $1.20 per share and has a dividend yield of 2.0%. Luby’s does not pay a dividend. Starbucks pays out 60.9% of its earnings in the form of a dividend.

Insider and Institutional Ownership

71.1% of Starbucks shares are held by institutional investors. Comparatively, 41.2% of Luby’s shares are held by institutional investors. 3.4% of Starbucks shares are held by company insiders. Comparatively, 35.2% of Luby’s shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Starbucks and Luby’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Starbucks 12.89% 53.34% 21.21%
Luby’s -6.19% -6.47% -4.08%

Earnings and Valuation

This table compares Starbucks and Luby’s’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Starbucks $22.39 billion 3.76 $2.88 billion $1.97 30.04
Luby’s $376.03 million 0.22 -$23.26 million ($0.79) -3.51

Starbucks has higher revenue and earnings than Luby’s. Luby’s is trading at a lower price-to-earnings ratio than Starbucks, indicating that it is currently the more affordable of the two stocks.

Summary

Starbucks beats Luby’s on 13 of the 15 factors compared between the two stocks.

About Starbucks

Starbucks Corporation (Starbucks) is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company’s Americas, CAP, and EMEA segments include both company-operated and licensed stores. Its Channel Development segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino, Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold across the world through channels, such as grocery stores, warehouse clubs, specialty retailers, convenience stores and the United States foodservice accounts.

About Luby’s

Luby’s, Inc., is a multi-branded company operating in the restaurant industry and in the contract food services industry. The Company is managed through three segments: Company-owned restaurants, franchise operations, and Culinary Contract Services (CSS). The company-owned restaurants brands are Luby’s Cafeteria, Fuddruckers, and Cheeseburger in Paradise with a couple of non-core restaurant locations under other brand names. As of August 31, 2016, the Company owned and operated 175 restaurants, with 127 in Texas and the remainder in other states. The Company offers franchises for the Fuddruckers brand. As of August 31, 2016, the number of franchised restaurants were 113. Culinary Contract Services consists of contract arrangements to manage food services for clients operating in three lines of business: healthcare, higher education, and corporate dining. As of August 31, 2016, the Company had 24 Culinary Contract Services contracts.

Receive News & Ratings for Starbucks Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Starbucks and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply