Stock Analysis

This Insider Has Just Sold Shares In Starbucks Corporation (NASDAQ:SBUX)

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NasdaqGS:SBUX
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We wouldn't blame Starbucks Corporation (NASDAQ:SBUX) shareholders if they were a little worried about the fact that Michael Conway, the Group President of International & Channel Development recently netted about US$1.5m selling shares at an average price of US$99.14. That's a big disposal, and it decreased their holding size by 18%, which is notable but not too bad.

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The Last 12 Months Of Insider Transactions At Starbucks

In the last twelve months, the biggest single purchase by an insider was when Founder & Director Howard Schultz bought US$10.0m worth of shares at a price of US$73.10 per share. Even though the purchase was made at a significantly lower price than the recent price (US$98.66), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Over the last year, we can see that insiders have bought 274.75k shares worth US$21m. On the other hand they divested 21.32k shares, for US$2.2m. In the last twelve months there was more buying than selling by Starbucks insiders. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NasdaqGS:SBUX Insider Trading Volume November 30th 2022

Starbucks is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Starbucks insiders own 2.0% of the company, currently worth about US$2.3b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Starbucks Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Starbucks insiders are well aligned, and quite possibly think the share price is too low. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 4 warning signs for Starbucks (2 make us uncomfortable!) that we believe deserve your full attention.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

What are the risks and opportunities for Starbucks?

Starbucks Corporation, together with its subsidiaries, operates as a roaster, marketer, and retailer of specialty coffee worldwide.

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Rewards

  • Earnings are forecast to grow 14.19% per year

Risks

  • High level of non-cash earnings

  • Negative shareholders equity

  • Significant insider selling over the past 3 months

  • Has a high level of debt

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