Is Starbucks Corporation (SBUX) overvalued?
On Equity Rank's model estimate, SBUX trades 78% above its fair value. Starbucks Corporation (SBUX) last closed at $105.41; the multi-method model fair value is $59.05.
| Price | Model fair value | Price vs model |
|---|---|---|
| $105.41 | $59.05 | 79% above |
What the answer rests on
- 0 of 8 valuation methods put SBUX's value above its price and 8 put it below, so the methods mostly agree.
- To justify today's price, SBUX's free cash flow would need to grow about 13.0% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 0.4% a year.
- SBUX trades at 49.6 times its last year's earnings, against a median of 26.2 for 28 profitable Restaurants companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 14% above to 88% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind SBUX's fair value · What prices assume · Other companies