SBUX
Starbucks Corporation
$92.19
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 20.0% above fair value
You pay
$92.19
Bear
$64.33
Fair
$76.84
Bull
$89.35
Bear
$64.33
-30.2%
$3.31 × 19x P/E
Fair
$76.84
-16.6%
$3.31 × 23x P/E
Bull
$89.35
-3.1%
$3.31 × 27x P/E
Adjust Assumptions
23.2x
3.31$
Key Value Driver
Normalized P/E multiple (23x base case)
Implied Market Multiple
27.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (59 analysts)
$115.50
Divergence from AlphaVal
33%
Summary
Applying a 23x P/E to adjusted EPS of $3.31, the base-case value is $76.84 per share. DDM cross-check: $73.91.
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 153% 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 $115.50 (from 59 analysts). Our estimate is 33% 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