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May 07, 2019

Luckin may dethrone Starbucks (SBUX, $77.62) in China

Starbucks’ Chinese rival, Luckin Coffee, is all set to take its rivalry with Starbucks to the next level as it filed for an IPO with the U.S. Securities and Exchange on Monday.

The company expects to raise $586.5 million in its initial public offering which implies an estimated offer of 34.5 million American depository shares (ADS) priced between $15 and $17 per ADS with each ADS representing eight Class A shares.

The coffee maker has been expanding rapidly with currently 2,370 stores in 28 Chinese cities and a plan to open another 2,500 stores by the end of this year in an ambition to replace Starbucks as the go-to coffee shop.

Coffee consumption in China has doubled to 8.7 billion cups last year from 4.4 billion in 2013 and is anticipated to rise to 15.5 billion cups by 2023. The Chinese coffee maker is rooting on this increase in consumption.

Further, Luckin’s app also has the option of ordering food and beverages outside coffee.  

However, the company’s growth also has a flipside - it’s running into losses and may continue to do so in the near future. To date, it has recorded net losses of $475.4 million and total revenue of $125.27 million. For the first three months of 2019, it posted a net loss of $85.3 million.

Yet, the coffee maker has some high-profile investors like U.S. money manager BlackRock (BLK) and Chinese investment firms Centurium Capital and Joy Capital.

Related Ticker: SBUX

SBUX in upward trend: price rose above 50-day moving average on January 21, 2025

SBUX moved above its 50-day moving average on January 21, 2025 date and that indicates a change from a downward trend to an upward trend. In of 48 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The 10-day moving average for SBUX crossed bullishly above the 50-day moving average on January 27, 2025. This indicates that the trend has shifted higher and could be considered a buy signal. In of 18 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SBUX advanced for three days, in of 291 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 211 cases where SBUX Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The RSI Indicator demonstrates that the ticker has stayed in the overbought zone for 18 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 19 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where SBUX declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

SBUX broke above its upper Bollinger Band on January 29, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. SBUX’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (0.000) is normal, around the industry mean (5.226). P/E Ratio (36.306) is within average values for comparable stocks, (56.887). SBUX's Projected Growth (PEG Ratio) (2.805) is slightly higher than the industry average of (1.783). Dividend Yield (0.021) settles around the average of (0.040) among similar stocks. P/S Ratio (3.540) is also within normal values, averaging (8.661).

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 83, placing this stock slightly better than average.

Notable companies

The most notable companies in this group are McDonald's Corp (NYSE:MCD), Starbucks Corp (NASDAQ:SBUX), Chipotle Mexican Grill (NYSE:CMG), Yum! Brands (NYSE:YUM), Darden Restaurants (NYSE:DRI), Yum China Holdings (NYSE:YUMC), Dominos Pizza Inc (NASDAQ:DPZ), Shake Shack (NYSE:SHAK), Noodles & Company (NASDAQ:NDLS).

Industry description

The industry includes companies that operate full-service restaurants, fast food restaurants, cafeterias and snack bars. McDonald`s Corporation, Starbucks Corporation, YUM! Brands, Inc. and Restaurant Brands International Inc. are some of the largest U.S. restaurant-owning companies in terms of market capitalization. While restaurant spending could be viewed as discretionary for consumers, some companies in the business have been able to weather economic cycles by establishing strong loyalty among customers over the years. Many of them also have a strong global presence as well.

Market Cap

The average market capitalization across the Restaurants Industry is 8.76B. The market cap for tickers in the group ranges from 2.74K to 221.11B. MCD holds the highest valuation in this group at 221.11B. The lowest valued company is BFICQ at 2.74K.

High and low price notable news

The average weekly price growth across all stocks in the Restaurants Industry was 1%. For the same Industry, the average monthly price growth was 11%, and the average quarterly price growth was 19%. YOSH experienced the highest price growth at 110%, while SPHIF experienced the biggest fall at -33%.

Volume

The average weekly volume growth across all stocks in the Restaurants Industry was -1%. For the same stocks of the Industry, the average monthly volume growth was 31% and the average quarterly volume growth was -14%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 47
P/E Growth Rating: 62
Price Growth Rating: 54
SMR Rating: 68
Profit Risk Rating: 82
Seasonality Score: -39 (-100 ... +100)
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General Information

a producer of coffee and tea

Industry Restaurants

Profile
Fundamentals
Details
Industry
Restaurants
Address
2401 Utah Avenue South
Phone
+1 206 447-1575
Employees
381000
Web
https://www.starbucks.com
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