Starbucks is one of the more attractive plays in the U.S. stock market. By March 23, the stock fell to just above $50 per share. It has since recovered to above $70, and many analyst ratings label it as a buy.
But is something brewing in Seattle?
Fitch Ratings recently downgraded the company’s credit rating from BBB+ to BBB, which is just two notches above junk territory.
The credit analysis firm blamed Starbucks’ enormous debt leverage and “significant business interruption” for the credit downgrades. What’s worse is that Fitch possesses a negative outlook that “could extend well into 2021.”
Starbucks has about $10 billion in debt, and its debt-to-equity ratio is roughly 80 percent. The company is issuing about $3 billion in debt to fund its spending initiatives.
At the time of this writing, Starbucks shares are down 2.75 percent to $71.76.
Despite rebounding 25 percent, it is still way below its 52-week high of $100. Is this a buying opportunity?
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