2. STARBUCKS
Overview
Valuation
Enhancement
Sensitivity
Recommendation
S.W.O.T
✔️

3. - Who are they?
- Seattle’s Best Coffee (1971)
- Products
- Espresso and Tea Beverages
- Pikes Place Market
- Operates 22,519 Stores
- Employs 191,000 Partners
- Retail Product lines
- Consumer Packaged Goods
- Ready to Eat and Drink Line

4. - How are they currently doing?
- Revenue: $20 Billion
- Margins: 60% (Gross) 15% (Net)
- Market Capitalization: $82.3 Billion
- Positive Growth Trends
- Awards and Recognition

5. - What is their business strategy/model?
- Customer Centric
- Serviced Based
- Third Place
- Brand Loyalty
- Sustainable Growth

6. STARBUCKS
Valuation
Enhancement
Sensitivity
Recommendation
S.W.O.T
✔️

7. - Brand Recognition
- Market Share
- Employee Satisfaction
- Affordable Luxury
- Brand Loyalty
- Quality Products

8. - High Operating Costs
- Business Model
- Expensive Product Development
- Acquisitions
- Joint Ventures

9. - Technology Innovation
- Foreign Expansion
- Tea Markets
- Strategic Partnership and
Acquisitions
- Green Initiative

11. - Low Barrier to Entry
- Commodity Price Pressure
- Supply Chain Management
- Market Saturation
- Exchange Rate Risk
- Global Slowdown

12. STARBUCKS
Valuation
Enhancement
Sensitivity
Recommendation
✔️

13. Growth Rate:
Terminal Growth Rate:
Beta:
Cost of Debt:
Cost of Equity:
Market Premium:
Effective Tax Rate:
WACC:
18.07%
1.01
3.14%
10.84%
8.86%
31.93%
8.63%
3.00%

14. - RD – Moody’s Credit Rating
- Beta Calculation (Regression)
- WACC
- CAPM – Market Premium (5 year historical avg.)
- Risk-free Rate
- Growth Rate
* Confirmed from the F.S.

15. PV FCFF:
PV Terminal Value:
Total Value of Firm:
Value of Debt:
Value of Equity:
# Outstanding Shares:
$15,594.57
$49,800.39
$65,384.96
$2,347.50
$63,047.46
1.46 Billion

16. - Competitors
- No true competitors
- Costa Coffee
- Dunkin Brands
- McDonalds
Dunkin Brands:
McDonalds:
Jamba Juice:
P/E P/S P/BV EV/EBITDA P/EBITDA
43.06
26.35
21.98
5.37
4.54
1.06
N/A
16.37
15.47
15.86
14.64
N/A
13.11
15.91
N/A
Average: 30.46 3.66 15.47 15.92 14.51
SBUX Implied Price: $57.88 $42.98 $62.34 $35.78

17. Growth Rate:
Terminal Growth Rate:
Unlevered Beta:
Cost of Debt:
Unlevered Cost of Equity:
Market Premium:
Effective Tax Rate:
WACC:
18.07%
1.01  .79
3.14%
10.84  8.89%
8.86%
31.93%
8.63  8.34%
3.00%

18. PV FCFF (Unlevered RE):
PV Terminal Value (Unlevered RE):
PV Tax Shield (Cost of Debt):
Total Value of Firm:
Value of Equity:
# Outstanding Shares:
$16,009.49
$47,308.78
$388.98
$63,707.25
$61,359.75
1.46 Billion

19. STARBUCKS
Enhancement
Sensitivity
Recommendation
✔️

20. Growth Rate
WACC

21. STARBUCKS
Enhancement
Recommendation
✔️

22. - Strong International Growth Prospects
- Recovery in Europe
- New product lines/ Distribution Channels
- Innovative Capacity
PV FCFF:
PV Terminal Value:
Total Value of Firm:
Value of Debt:
Value of Equity:
# Outstanding Shares:
10-Yr. Extended
Growth 2 Stage Growth
$39,510
$76,373
$115,883
$2,348
$113,536
$77.76
$29,948
$76,373
$105,921
$2,348
$103,573
1.46 Billion



$70.94
1.46 Billion
Recommendation

23. STARBUCKS
Recommendation
✔️

24. Price Target: $70.94
Current Price: $56.45