Seattle, Washington-based Starbucks Corporation (NASDAQ: SBUX) was launched as a single store offering coffee beans and coffeemakers in 1971. Howard Schultz joined the company in 1982 and expanded distribution to include restaurants, coffee bars and various retail outlets. Schultz left Starbucks in 1985 after failing to persuade owners to serve coffee and related beverages rather than supplies. He formed a chain of coffee bars called Il Giornale throughout Seattle. In 1987, Schultz purchased Starbucks and renamed all of his locations under the Starbucks banner. The company popularized the specialty coffee genre. It expanded into licensing, distribution and product brands, including Teavana, Tazo, Ethos, Frappuccino and La Boulange. Starbucks has grown into a global brand operating in over 23,900 stores throughout more than over 65 countries worldwide and generated full-year 2015 annual revenues of $19.70 billion. The following is an analysis of the capital structure for Starbucks Corporation for the year-over-year (YOY) period from December 2014 to December 2015, with an update using 3Q 2018 data to see how the company has grown since.

Equity Capitalization

Starbucks had 1.51 billion fully diluted shares outstanding, with a market cap of $61.88 billion on Dec. 31, 2014. The company implemented a two-for-one stock split for shareholders on record as of March 30, 2015. The shares began trading split-adjusted on April 9, 2015. This caused the market cap to spike to $143.77 billion at the end of the first quarter. The diluted share count representing stock compensation nearly doubled from 11.3 million to 22 million shares at the end of the second quarter. The total equity market cap fell to $82.67 billion.

Third-quarter diluted shares reached 30.5 million, representing $1.76 billion in stock compensation, at the end of September 2015. This raised the total equity market cap to $87.88 billion. The fourth-quarter diluted share count dropped to 9.4 million valued at $567 million by the end of December 2015, closing out the year with 1.49 billion total fully diluted shares outstanding valued at a $90.17 market cap, for a 45.7% YOY rise. Shares of Starbucks gained 47.98% for full-year 2015 compared to 1.38% for the Standard and Poor's (S&P 500) Index performance.

By October of 2018, SBUX market cap has grown to $76.2 billion with a trailing P/E of 17.62x based on diluted earnings per share of $3.20.

Debt Capitalization

The company debt load increased by net $299.2 million to a total of $2.34 billion at the end of 2015, which was up 14.2% YOY. In the third quarter, Starbucks issued $850 million in additional long-term debt, which was composed of $350 million in 30-year 4.300% senior notes due June 2045 and $500 million in seven-year 2.700% senior notes due June 2022. It used the proceeds to redeem $550 million of the 6.250% senior notes due August 2017. This transaction essentially transferred the $549.8 million short-term debt into long-term debt, as cited on the consolidated balance sheets. At year-end 2015, Starbucks had $2.34 billion in total debt divided by $12.44 billion in total assets for a debt-to-equity ratio of 18.7%. Considering the industry average is near 40%, Starbucks is an extremely well-managed cash flow machine with access to cheap rates due to the solid stability of its balance sheet.

As of October 2018, total long-term debt exceeded $4 billion, with a debt-to-equity ratio of 1.70.

Enterprise Value Analysis

Starbucks started 2015 with $61.57 billion in enterprise value (EV). The company completed the acquisition of the remaining 60.5% interest in Starbucks Japan in July 2015. For full-year 2015, Starbucks saw global comparable same-store sales grow 7% YOY on a 3% YOY increase in store traffic. Full-year revenues climbed 17% YOY to $19.2 billion, with GAAP operating profits growing 17% YOY to $3.6 billion. Full-year earnings grew 35% YOY to $1.82 per share. The company also bought back 29 million shares in 2015. Starbucks paid out a 20-cent period share dividend on Nov. 27, 2015. These are all components that contributed to the 47.8% annual performance return on shares. This resulted in a year-end 2015 EV of $90.56 billion, which was up 47% from 2014.

By Q3 2018, SBUX commanded an enterprise value of $78.84 billion with an Enterprise Value/EBITDA ratio of 15.57x.