NEW YORK (TheStreet) -- Shares of Starbucks (SBUX) - Get Report are down by 0.8% to $57.90 in afternoon trading on Friday, after the company announced that it is raising wages for its UK staff effective April 2016.
Starbucks is raising its minimum wage to 7.20 pounds, or $10.92, per hour regardless of age.
The current UK minimum wage for workers over 21 is 6.50 per hour though that number is set to rise to 6.70 pounds per hour in October.
The company also said that it will offer interest-free loans to employees who are moving into new homes.
Starbucks will provide a maximum rental deposit loan equivalent to one month's wages to repaid over 12 months.
Separately, TheStreet Ratings team rates STARBUCKS CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
We rate STARBUCKS CORP (SBUX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.1%. Since the same quarter one year prior, revenues rose by 17.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 52.05% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- STARBUCKS CORP has improved earnings per share by 22.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, STARBUCKS CORP turned its bottom line around by earning $1.36 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($1.58 versus $1.36).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 22.2% when compared to the same quarter one year prior, going from $512.70 million to $626.60 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, STARBUCKS CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SBUX