SBUX
Starbucks Corporation
$103.11
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 17.3% above fair value
You pay
$103.11
Bear
$73.61
Fair
$87.92
Bull
$102.24
Bear
$73.61
-28.6%
$3.31 × 19x P/E
Fair
$87.92
-14.7%
$3.31 × 23x P/E
Bull
$102.24
-0.8%
$3.31 × 27x P/E
Key Value Driver
Normalized P/E multiple (23x base case)
Implied Market Multiple
31.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $108.50 from 59 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $87.92 per share.
Warnings
The company's reported profits differ from official accounting profits by 103%. Check what costs are being left out of the adjusted number.
The company pays out 152% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $108.50 (from 59 analysts). Our estimate is 29% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples