THE WORKDAY CAFE
Starbucks Corp. (SBUX) Valuation
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Executive Summary
Starbucks purchases and roasts high-quality coffees that is sold, along with handcrafted coffee, tea and other beverages and a variety of high-quality food items through company-operated stores. Starbucks also sells a variety of coffee and tea products and licenses our trademarks through other channels such as licensed stores, as well as grocery and food services through Global Coffee Alliance with Nestlé. In addition to the flagship Starbucks Coffee brand, the company sells goods and services under the following brands: Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve and Princi.
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- $102.67 - Value (PPS) from Industry Relative Valuation
- $180.00 - Value (PPS) from Financial Relative Valuation
- $103.65 - Value (PPS) from Discounted Cash Flow
$107.03 - Reconciled Share Price Estimate
When comparing to Starbucks' current share price of $79.32, a buy recommendation is issued.
Table of Contents
- Company Overview
- Future Strategies
- Revenue & COGS Trends
- The Customers & Store Geography
- Distribution Channels
- SWOT Analysis
Company Overview
Starbucks Corp. (SBUX) currently trades on the NASDAQ with a current price of $79.32, a market cap of 92.72 Billion, and has a fiscal year end on the last Saturday of September. All information is in millions of USD except for share prices or marked otherwise.
Future Strategies
Starbucks’ objective is to maintain the company’s standing as one of the most recognized and respected brands in the world.
- Expand global store base to all markets
- Optimiz the mix of company-operated and licensed stores around the world
- Continue Starbucks Global Social Impact strategy
Revenue & COGS Trends
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- 2019 Revenue Values:
- $21,544.40 - Company-operated stores
- $2,875.00 - Licensed stores
- $2,089.20 - Other (including prepackaged food & beverages sol outside company-operated and licensed stores)
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- 2019 COGS Values:
- $8,526.90 - Cost of sales including occupancy costs
The Customers & Store Geography
Starbucks provides high quality beverages and food products to front facing consumers, through company-operated and licensed stores, and prepackaged drinks and food products to out of store sellers.
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- 2019 # of Stores Open:
- 8,575 - U.S.
- 1,109 - Canada
- 6 - Siren Retail (Americas)
- 3,521 - China
- 1,286 - Japan
- 352 - Thialand
- 335 - U.K.
- 155 - All Other
- 2 - Siren Retail other
Distribution Channels
Starbucks depends on our relationships with coffee producers, outside trading companies and exporters for supply of green coffee. Currently, based on relationships established with suppliers, the risk of non-delivery on such purchase commitments is remote. In addition to coffee, Starbucks also purchases significant amounts of dairy products, particularly fluid milk, to support the needs of company-operated stores. It is believed, based on relationships established with our dairy suppliers, that the risk of non-delivery of sufficient fluid milk to support our stores is remote.
Sources: Starbucks Corp.'s 10K & Bloomberg
SWOT Analysis
Strengths
• Strong brand image/reputation
• Quality, taste and standardization
• Great relationships with investors, customers, employees, and farmers
• Growth in stores
• Large market shares
Weaknesses
• High prices
• Imitability of products
• Generalized standards for most products which could hurt cultures with different standards
Opportunities
• Expansion in developing markets
• Introducing new products
• Partnerships with other firms
Threats
• Competition with low-cost coffee sellers and big outlets
• Imitation
• Independent coffeehouse movements
Source: bstrategyhub
Disclaimer
The Workday Cafe is not a registered investment, legal or tax advisor or a broker/dealer. All investment/financial opinions expressed by The Workday Cafe are from the personal research and experience of the evaluator and are intended for informational purposes only. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.