SBUX
Starbucks Corporation
$103.25
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 17.0% above fair value
You pay
$103.25
Bear
$73.90
Fair
$88.27
Bull
$102.64
Bear
$73.90
-28.4%
$3.31 × 19x P/E
Fair
$88.27
-14.5%
$3.31 × 23x P/E
Bull
$102.64
-0.6%
$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 $109.50 from 59 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $88.27 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 $109.50 (from 59 analysts). Our estimate is 30% 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