If you’re considering investing in Starbucks (SBUX) but you are not sure if it is halal to invest in this stock. You can find out the Shariah compliance status of Starbucks by reading this article!
Around 20 research reports about Starbucks (SBUX) have been written in the past few months, representing strong analyst interest in this stock. While some investors may want to sell the stock checking Starbucks’ full-year FY22 projections, others can see Starbucks’ business continue to increase over the long term despiteshort-term challenges. Starbucks continues to return value to shareholders by raising its dividend. Moreover, Starbucks has already overcome many challenges during tough times and performed well in the end. Therefore, analysts think Starbucks will keep doing that for years to come.
Starbucks Business Activity
Starbucks Corp. is a producer, marketer, and retailer of speciality coffee with 32,000+ stores in 83 markets. The company offers a range of exceptional products like coffee, beverages, and fresh food. Starbucks Corp is headquartered in Seattle, Washington, and currently employs 383,000 workers across the globe. The company operates through three segments: Americas including the United States, Canada, and Latin America; International including China, Japan, Asia Pacific, Europe, the Middle East, and Africa; and Channel Development.
Starbuck Corp sells coffee, a variety of beverages and fresh foods through company-operated stores and licensed stores to its American and International segments. On the other hand, the Channel Development segment engages in the sale of packaged coffee, tea, and beverages to customers outside of its Company-operated and authorized stores. Moreover, the company sells different products and services under various brands such as Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve, and Princi.
Is Starbucks Stock Halal? Business Screening Results
Firstly, we check the business activity of Starbuck. The company’s non-Shariah-Compliant business activities comprise only 4.18% of its overall revenue. And the rest 95.82% of its revenue comes from halal segments. Since not halal and questionable business activities do not exceed 5% of its total revenue, Starbucks successfully passes the first screening criterion.
Financial Screening Results
Secondly, we conduct a financial screening analysis. Of course, we screen the company’s interest-bearing debt ratio. The interest-bearing debt should not exceed 30% of the company’s market capitalization. In Starbucks’ case, the percentage of interest-bearing debt is 14.71% of its market capitalization. So, we can conclude that it meets the criteria.
| Total Debt | $16.02B |
| 36 Month Average Market Capitalization | $108.89B |
Finally, we need to screen for interest-bearing securities. Starbucks’s cash and interest-bearing securities account for 3.93% of its market capitalization, and the total amount of securities that earn interest should not exceed 30% of its market capitalization.
| Cash and Interest-Bearing Securities | $4.28B |
| Market36 Month Average Market Capitalization Cap | $108.89B |
In conclusion, Starbucks successfully passes all business and financial screenings. Therefore, the status of Starbucks is Halal on our platform.
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As a seasoned financial analyst and enthusiast with a deep understanding of Shariah-compliant investment principles, I've delved into various industries and scrutinized the financial details of numerous companies. My expertise extends to evaluating the Halal status of stocks, and I'm well-versed in deciphering complex financial statements to provide insightful assessments.
In the context of the article about Starbucks (SBUX), let's break down the key concepts mentioned:
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Analyst Interest and Projections:
- The article highlights around 20 research reports on Starbucks in recent months, indicating strong analyst interest.
- Some investors may consider selling based on Starbucks' full-year FY22 projections, while others foresee long-term growth despite short-term challenges.
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Dividend and Performance:
- Starbucks is returning value to shareholders by increasing its dividend.
- The company has a track record of overcoming challenges during tough times and has performed well in the end, contributing to analysts' confidence in its future performance.
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Starbucks Business Activity:
- Starbucks Corporation is a producer, marketer, and retailer of specialty coffee with 32,000+ stores in 83 markets.
- The company operates through three segments: Americas, International, and Channel Development.
- It sells coffee, beverages, and fresh food through company-operated and licensed stores, as well as packaged products under various brands.
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Halal Status Screening:
- The article conducts a screening to determine if Starbucks is Halal for investment.
- Business Activity Screening: Starbucks' non-Shariah-compliant activities constitute only 4.18% of its overall revenue, meeting the screening criteria.
- Financial Screening: The interest-bearing debt ratio is 14.71%, below the acceptable threshold of 30% of market capitalization.
- Interest-Bearing Securities: Cash and interest-bearing securities account for 3.93% of market capitalization, staying within the 30% limit.
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Conclusion:
- Starbucks successfully passes both business and financial screenings, leading to the determination that it is Halal for investment.
This comprehensive analysis, rooted in both business operations and financial metrics, provides a clear and evidence-based understanding of Starbucks' investment viability from a Shariah-compliance perspective. For those considering Halal investments, such rigorous screening processes are crucial in making informed decisions.
