As of May 28, 2025, Starbucks Corp's estimated intrinsic value ranges from $46.91 to $122.67 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $122.67 | +41.0% |
| Discounted Cash Flow (5Y) | $100.17 | +15.1% |
| Dividend Discount Model (Multi-Stage) | $86.70 | -0.4% |
| Dividend Discount Model (Stable) | $50.69 | -41.7% |
| Earnings Power Value | $46.91 | -46.1% |
Is Starbucks Corp (SBUX) undervalued or overvalued?
With the current market price at $87.01, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Starbucks Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.75 | 0.77 |
| Cost of equity | 7.3% | 9.2% |
| Cost of debt | 4.0% | 4.9% |
| Tax rate | 22.1% | 22.9% |
| Debt/Equity ratio | 0.16 | 0.16 |
| After-tax WACC | 6.7% | 8.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $100 | $126,734M | 82.4% |
| 10-Year Growth | $123 | $152,299M | 68.2% |
| 5-Year EBITDA | $127 | $157,682M | 85.9% |
| 10-Year EBITDA | $149 | $181,820M | 73.4% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $4,960M |
| Discount Rate (WACC) | 8.4% - 6.7% |
| Enterprise Value | $58,797M - $73,628M |
| Net Debt | $12,900M |
| Equity Value | $45,896M - $60,728M |
| Outstanding Shares | 1,136M |
| Fair Value | $40 - $53 |
| Selected Fair Value | $46.91 |
| Metric | Value |
|---|---|
| Market Capitalization | $98878M |
| Enterprise Value | $111779M |
| Trailing P/E | 31.60 |
| Forward P/E | 22.95 |
| Trailing EV/EBITDA | 16.80 |
| Current Dividend Yield | 279.05% |
| Dividend Growth Rate (5Y) | 7.67% |
| Debt-to-Equity Ratio | 0.16 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $36.80 |
| Discounted Cash Flow (5Y) | 25% | $25.04 |
| Dividend Discount Model (Multi-Stage) | 20% | $17.34 |
| Dividend Discount Model (Stable) | 15% | $7.60 |
| Earnings Power Value | 10% | $4.69 |
| Weighted Average | 100% | $91.48 |
Based on our comprehensive valuation analysis, Starbucks Corp's weighted average intrinsic value is $91.48, which is approximately 5.1% above the current market price of $87.01.
Key investment considerations:
Given these factors, we believe Starbucks Corp is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.