As of May 23, 2025, Starbucks Corp has a Discounted Cash Flow (DCF) derived fair value of $124.89 per share. With the current market price at $83.97, this represents a potential upside of 48.7%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $101.98 |
| DCF Fair Value (10-year) | $124.89 |
| Potential Upside (5-year) | 21.4% |
| Potential Upside (10-year) | 48.7% |
| Discount Rate (WACC) | 6.6% - 8.5% |
Revenue is projected to grow from $36176 million in 09-2024 to $63753 million by 09-2034, representing a compound annual growth rate of approximately 5.8%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 09-2024 | 36176 | 1% |
| 09-2025 | 36532 | 1% |
| 09-2026 | 39096 | 7% |
| 09-2027 | 40668 | 4% |
| 09-2028 | 43735 | 8% |
| 09-2029 | 46563 | 6% |
| 09-2030 | 49864 | 7% |
| 09-2031 | 53052 | 6% |
| 09-2032 | 56087 | 6% |
| 09-2033 | 58892 | 5% |
| 09-2034 | 63753 | 8% |
Net profit margin is expected to improve from 10% in 09-2024 to 16% by 09-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 09-2024 | 3762 | 10% |
| 09-2025 | 4308 | 12% |
| 09-2026 | 5045 | 13% |
| 09-2027 | 5691 | 14% |
| 09-2028 | 6587 | 15% |
| 09-2029 | 7500 | 16% |
| 09-2030 | 8032 | 16% |
| 09-2031 | 8545 | 16% |
| 09-2032 | 9034 | 16% |
| 09-2033 | 9486 | 16% |
| 09-2034 | 10269 | 16% |
with a 5-year average of $1981 million. Projected CapEx is expected to maintain at approximately 6% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 09-2025 | 2141 |
| 09-2026 | 2336 |
| 09-2027 | 2475 |
| 09-2028 | 2555 |
| 09-2029 | 2582 |
| 09-2030 | 2748 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 13 |
| Days Inventory | 28 |
| Days Payables | 22 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 6M/2025 | 3916 | 622 | 1141 | 137 | 2016 |
| 2026 | 8987 | 1457 | 2443 | (56) | 5143 |
| 2027 | 9965 | 1644 | 2541 | 76 | 5704 |
| 2028 | 11212 | 1903 | 2733 | 167 | 6409 |
| 2029 | 12426 | 2167 | 2909 | 73 | 7277 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 101.98 | 21.4% |
| 10-Year DCF (Growth) | 124.89 | 48.7% |
| 5-Year DCF (EBITDA) | 123.53 | 47.1% |
| 10-Year DCF (EBITDA) | 145.33 | 73.1% |
Is Starbucks Corp (SBUX) a buy or a sell? Starbucks Corp is definitely a buy. Based on our DCF analysis, Starbucks Corp (SBUX) appears to be significantly undervalued with upside potential of 48.7%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $83.97.