Starbucks: What The 3-Step DuPont Model Reveals About Valuation

2026-02-20 03:39:30 ET

Introduction & Key Takeaway

We previously published an article on Starbucks Corporation ( SBUX ) in May 2024. At that time, we used Greenblatt’s Magic Formula* lens to evaluate the stock and issued a buy recommendation. A core tenet of the Magic Formula framework is to purchase the stock if the business is earning high returns on tangible assets and also valued at a reasonable earnings yield as measured by the operating income relative to the enterprise value. Another principle of the methodology is to redeploy the capital if there is sufficient appreciation and/or if the earnings yield no longer offers a sufficient margin of safety. Please see Tables 1 and 2....

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