Restaurants · NASDAQ
Current Price
$105.50
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Starbucks Corporation with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Starbucks Corporation, together with its subsidiaries, operates as a roaster, marketer, and retailer of specialty coffee worldwide. The company operates through three segments: North America, International, and Channel Development. Its stores offer coffee and tea beverages, roasted whole beans and ground coffees, single serve products, and ready-to-drink beverages; and various food products, such as pastries, breakfast sandwiches, and lunch items. The company also licenses its trademarks through licensed stores, and grocery and foodservice accounts. The company offers its products under the Starbucks, Teavana, Seattle's Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve, and Princi brands. As of October 3, 2021, it operated 16,826 company-operated and licensed stores in North America; and 17,007 company-operated and licensed stores internationally. The company was founded in 1971 and is based in Seattle, Washington.
ROIC (TTM)
7.6%
ROE (TTM)
-18.3%
FCF Yield
1.94%
The intrinsic value of SBUX depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether SBUX is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $105.50. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Starbucks Corporation: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Restaurants industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting SBUX's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Starbucks Corporation, this means projecting how much free cash flow the Restaurants will produce over the next 5-10 years, then discounting those amounts to today's dollars. SBUX's ROIC of 7.6% suggests the company may face challenges generating returns above its cost of capital.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For SBUX, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
