What MarketBeat’s Comparison Tool Says for These 3 Coffee Stocks

From Amazon.com and Google Shopping to Become and Shopzilla, there are many comparison shopping websites and apps these days. They are helping consumers save money and make informed purchasing decisions.

Wouldn’t it be great if there was something similar for equity investors?

It does!

MarketBeat’s free stock comparison tool helps investors evaluate potential stock purchases through a wide range of data. It allows users to compare publicly traded companies across various fundamental and technical parameters, as well as by price and performance.

You can accumulate up to 10 shares at a time. Information such as profitability, dividends, analyst ratings and news sentiment can provide valuable information about which stocks to buy or sell. There are also some pre-defined comparison ideas that start with companies exposed to a certain industry, theme or investment style.

While they are incredibly useful, it can also be fun to create your own “sandbox” for comparing stocks.

Need a caffeine boost? Great, because we just hosted a battle between three popular coffee chains. Let’s meet the contenders.

Starbucks Corporation NASDAQ: SBUX – With more than 38,000 locations focused on high-quality, ethically sourced arabica coffee, Starbucks is the largest coffee retailer in the world.

Dutch Bros Inc. NYSE: BROTHERS – A fast-growing coffee and energy drink company with 794 drive-thru stores in 16 U.S. states.

Luckin Coffee Inc. OTCMKTS: LKNCY – The largest coffee chain operator in China with 13,273 locations and a technology-driven business model that features cashierless transactions and AI data analytics.

We’ve done a comparison of these three stocks to find out where they’ve been and where they might go in the future. Here are just some of the highlights.

Historical performance – 365 days

SBUX: -10.8%

LKNCY: -24.2%

BROS: -31.1%

The last 12 months have been challenging for all three companies due to the effects of inflation and rising rates on consumer demand, as well as supply chain constraints and wage pressures (e.g., unionization efforts of Starbucks employees).

Current stock price and 52 week range

LKNCY: $22.25 (from $17.77 to $38.88)

BROS: $26.00 (from $22.67 to $40.87)

SBUX: $94.50 ($89.21 to $115.48)

All three stocks are trading within 25% of their 52-week lows, which could indicate a long-term opportunity for all three. Luckin Coffee ADR has the lowest share price, but that doesn’t necessarily make it the best deal.

Valuation – price-sales ratio (P/S).

SBUX: 2.97x

LKNCY: 3.21x

BRO: 6.23x

At approximately 3x trailing 12-month revenue, SBUX is the least expensive stock from a valuation perspective. BROS, which has perhaps the greatest growth potential, is of course twice as expensive as SBUX. LKNCY commands a P/S multiple comparable to SBUX.

Risk – beta

BROS: 2.41

SBUX: 0.99

LKNCY: -0.59

As an unproven mid-cap company, BROS is by far the riskiest of the three. Its beta of 2.41 means that for every 1% move in the US stock market (up or down), BROS typically moves 2.41%. This could make it an attractive candidate for high-risk investors.

For more conservative investors, SBUX may be the better choice because it is the more mature company and has historically moved in tandem with the broader market. LKNCY is a unique case. Its negative beta means it generally moves in the opposite direction of the U.S. stock market, which could make it a valuable diversifier.

Analyst ratings and price targets

BROS: Hold ($34.70)

SBUX: Hold ($111.43)

LKNCY: n/a

In Wall Street’s consensus opinion, neither BROS nor SBUX are a buy. Last week, several analysts lowered their price targets on SBUX in the wake of the company’s earnings miss in the fiscal first quarter of 2024. BROS got an upgrade from Hold to Buy at Stifel Nicholas last month after forecasting 150 to 165 store openings in 2024 and announced a change in leadership.

Despite the maintained ratings, consensus targets implying 33% and 18% upside for BROS and SBUX respectively, suggest decent gains will be made over the next 12 months. LKNCY is not currently tracked by US research firms, which adds uncertainty to the stock in addition to China risk.

Overall

As the incumbent and only large cap of the group, SBUX appears to be the most appropriate option for low to moderate risk equity investors. It is also the only company to offer a dividend with a current yield of 2.4%. BROS has ambitious growth plans and significant upside, but as the smallest of the three coffee chains, it carries the most risk. LKNCY is exposed to China’s huge consumer base and trades near lows, but being a bit of a wild card, it won’t be everyone’s cup of tea.

Both BROS and LKNCY are expected to announce fourth-quarter financials on February 28. Until then, we hope you’ll enjoy sipping on this stock comparison tool for more tasty insights.

Before you consider Starbucks, you’ll want to hear about it.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Starbucks wasn’t on the list.

While Starbucks currently has a “Hold” rating among analysts, top analysts believe these five stocks are better buys.

View the five stocks here