Starbucks Corporation (SBUX)

Discount cash flow analysis

Sell Overvalued by 77.9%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Starbucks Corporation, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2008 2009 2010 2011 2012 2013 2014 2015
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $12.06 $11.88 $11.70
Terminal Growth% 0 $12.14 $11.95 $11.77
  +1% $12.21 $12.02 $11.84

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $18.24 (overvalued by 66.21%) - 9 months ago
  • GordonGekko created a new valuation of $26.75 (overvalued by 18.94%) - over 6 years ago
  • mlillard created a new valuation of $12.23 (overvalued by 45.88%) - over 7 years ago
  • mlillard created a new valuation of $12.23 (overvalued by 45.88%) - over 7 years ago
  • mlillard created a new valuation of $12.12 (overvalued by 46.37%) - over 7 years ago
  • mlillard created a new valuation of $12.09 (overvalued by 46.5%) - over 7 years ago
  • jignesh11 created a new valuation of $15.07 (overvalued by 33.32%) - over 7 years ago
  • jignesh11 created a new valuation of $15.07 (overvalued by 33.32%) - over 7 years ago
  • mlillard created a new valuation of $12.17 (overvalued by 44.15%) - over 7 years ago
  • smdet created a new valuation of $25.79 (undervalued by 35.88%) - over 7 years ago
  • smdet created a new valuation of $25.79 (undervalued by 35.88%) - over 7 years ago
  • GordonGekko created a new valuation of $11.95 (overvalued by 38.72%) - almost 8 years ago
  • SethWellbourne created a new valuation of $7.52 (overvalued by 33.21%) - 8 years ago
  • GordonGekko created a new valuation of $11.73 (undervalued by 40.31%) - over 8 years ago
  • rileyj98 created a new valuation of $17.00 (undervalued by 103.35%) - over 8 years ago
  • GordonGekko created a new valuation of $17.00 (undervalued by 8.01%) - 9 years ago
  • TheCrunchBlog created a new valuation of $15.07 (overvalued by 4.26%) - 9 years ago
  • GordonGekko created a new valuation of $17.63 (overvalued by 0.79%) - 9 years ago
  • Sam created a new valuation of $18.45 (undervalued by 2.22%) - 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 40,729
Net Debt (Long-term borrowings less cash): 941
Equity Value: 14,181
Number of Shares Outstanding: 737,000,000
Calculated value per share: $11.95

Enterprise Value is the present value of the post-tax cash flows for a business into the future.


Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.


Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.


CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.