Starbucks (SBUX:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Starbucks(SBUX:NAS)

Consumer Cyclical:Restaurants

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$66.08 (USD) 27/11/2018

Weighted Valuation
$67.04 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 1.4%

Valuation Models Analyst Consensus: $65.20 (USD)
(in order of importance) Multiples: $69.79 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (SBUX:NAS USD)

Price 66.08
Range 65.31 – 66.55
52 week 48.54 – 68.72
Open 65.46
Vol / Avg. 13.13M/14.99M
Mkt cap 81.5B
P/E 20.40
Div/yield 1.26/0.02
EPS 3.24
Shares 1.24B
Beta 0.48

Company Description

Starbucks Corp through a global chain of 28,700 company-owned and licensed stores, Starbucks sells coffee, espresso, teas, cold blended beverages, food, and accessories. The company also distributes packaged and single-serve coffee, tea, juice, and pastries through its own stores, grocery store chains, and warehouse clubs under the Starbucks, Teavana, and Seattle’s Best Coffee brands through a partnership with Nestle. In addition, Starbucks markets bottled beverages, ice creams, and liqueurs through various partnerships.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for SBUX:NAS

Using a discounted cash flow model we generated an intrinsic value of $79.65 (USD) for SBUX:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

SBUX:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $79.65 1% 5% 1% 5%
WACC (or Ke) 6.23 $100.51 $65.71
Terminal Growth Rate 1.20 $67.08 $98.45
Tax Rate 0.22 $84.20 $75.10
Cash Flow 7,098,168,000 $75.41 $83.89
Capital Expenditures -1,480,140,000 $78.83 $80.47
Long Term Debt 3,602,200,000 $79.79 $79.50

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $91.71 (USD) for SBUX:NAS. We also generated a valuation of $102.82 (USD) using other metrics and comparables.
The comparable companies were McDonald’s (MCD:NYS) and Yum Brands (YUM:NYS).

Company SBUX:NAS End Date Value
Earnings/Share $3.24 (USD)
Book Value/Share $3.05 (USD)
Sales/Share $16.98 (USD)
Cash Flow/Share $3.18 (USD)
EBITDA/Share $5.20 (USD)
Price Based on Comps Adjustment Factor (%)
$73.32 (USD) 0.0
$0.00 (USD) 34.1
$101.41 (USD) 18.2
$82.94 (USD) 0.0
$90.71 (USD) 0.0
SBUX:NAS Ratios Used Average Values MCD:NYS YUM:NYS
18.15 PE Ratio 22.63 25.94 19.32
19.11 PB Ratio 0.00 0.00 0.00
3.43 PS Ratio 5.97 6.56 5.38
18.31 PCF Ratio 28.19 24.52 31.86
11.02 EV to EBITDA 17.43 15.09 19.78

Multiples

Using a multiples approach we generated a valuation of  $69.79 (USD) for SBUX:NAS

Company SBUX:NAS End Date Value
Earnings/Share $3.24 (USD)
Book Value/Share $3.05 (USD)
Sales/Share $16.98 (USD)
Cash Flow/Share $3.18 (USD)
EBITDA/Share $5.20 (USD)
Price Based on Comps Adjustment Factor
$92.35 (USD) 0
$44.11 (USD) 0
$67.05 (USD) 0
$64.93 (USD) 0
$80.51 (USD) 0
Ratios Ratio Average
PE Ratio 28.50
PB Ratio 14.47
PS Ratio 3.95
PCF Ratio 20.40
EV to EBITDA 15.47

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  SBUX:NAS for the last 10 years was  14.37

We ran the Adjusted Book Value for  SBUX:NAS and generated a book value of  $0.89 (USD)
By multiplying these we get an adjusted valuation of  $12.84 (USD)

Analyst Data

In the Stockcalc database there are 5 analysts that provide a valuation for SBUX:NAS. The 5 analysts have a concensus valuation for SBUX:NAS for 2019 of $65.20 (USD).

SBUX:NAS Starbucks

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
6 1 0 4.6250 Buy 2018-11-26

Current Price: 66.08 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 2.68 3.04 3.48
# EPS Analysts 4 3 1
Mean Revenue 26,477.10 28,169.90 30,624.50
# Revenue Analysts 3 2 1
Mean Target Price 65.20
Mean Cash Flow 3.76 4.26 4.89
Mean EBITDA 5,911.20 6,324.70 7,014.00
Mean Net Income 3,424.60 3,576.10 3,908.10
Mean Debt Outstanding 5,047.50 10,254.70 11,281.60
Mean Tax Rate 24.00 24.00
Mean Growth Rate 12.05
Mean Capital Expenditure 1,849.90 1,850.00 1,900.00

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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