SBUX FINAL Presentation
- 3. - Who are they? - Seattle’s Best Coffee (1971) - Products - Espresso and Tea Beverages - Pikes Place Market - Operates 22,519 Stores - Employs 191,000 Partners - Retail Product lines - Consumer Packaged Goods - Ready to Eat and Drink Line
- 4. - How are they currently doing? - Revenue: $20 Billion - Margins: 60% (Gross) 15% (Net) - Market Capitalization: $82.3 Billion - Positive Growth Trends - Awards and Recognition
- 5. - What is their business strategy/model? - Customer Centric - Serviced Based - Third Place - Brand Loyalty - Sustainable Growth
- 7. - Brand Recognition - Market Share - Employee Satisfaction - Affordable Luxury - Brand Loyalty - Quality Products
- 8. - High Operating Costs - Business Model - Expensive Product Development - Acquisitions - Joint Ventures
- 9. - Technology Innovation - Foreign Expansion - Tea Markets - Strategic Partnership and Acquisitions - Green Initiative
- 11. - Low Barrier to Entry - Commodity Price Pressure - Supply Chain Management - Market Saturation - Exchange Rate Risk - Global Slowdown
- 13. Growth Rate: Terminal Growth Rate: Beta: Cost of Debt: Cost of Equity: Market Premium: Effective Tax Rate: WACC: 18.07% 1.01 3.14% 10.84% 8.86% 31.93% 8.63% 3.00%
- 14. - RD – Moody’s Credit Rating - Beta Calculation (Regression) - WACC - CAPM – Market Premium (5 year historical avg.) - Risk-free Rate - Growth Rate * Confirmed from the F.S.
- 15. PV FCFF: PV Terminal Value: Total Value of Firm: Value of Debt: Value of Equity: # Outstanding Shares: $15,594.57 $49,800.39 $65,384.96 $2,347.50 $63,047.46 1.46 Billion
- 16. - Competitors - No true competitors - Costa Coffee - Dunkin Brands - McDonalds Dunkin Brands: McDonalds: Jamba Juice: P/E P/S P/BV EV/EBITDA P/EBITDA 43.06 26.35 21.98 5.37 4.54 1.06 N/A 16.37 15.47 15.86 14.64 N/A 13.11 15.91 N/A Average: 30.46 3.66 15.47 15.92 14.51 SBUX Implied Price: $57.88 $42.98 $62.34 $35.78
- 17. Growth Rate: Terminal Growth Rate: Unlevered Beta: Cost of Debt: Unlevered Cost of Equity: Market Premium: Effective Tax Rate: WACC: 18.07% 1.01 .79 3.14% 10.84 8.89% 8.86% 31.93% 8.63 8.34% 3.00%
- 18. PV FCFF (Unlevered RE): PV Terminal Value (Unlevered RE): PV Tax Shield (Cost of Debt): Total Value of Firm: Value of Equity: # Outstanding Shares: $16,009.49 $47,308.78 $388.98 $63,707.25 $61,359.75 1.46 Billion
- 20. Growth Rate WACC
- 22. - Strong International Growth Prospects - Recovery in Europe - New product lines/ Distribution Channels - Innovative Capacity PV FCFF: PV Terminal Value: Total Value of Firm: Value of Debt: Value of Equity: # Outstanding Shares: 10-Yr. Extended Growth 2 Stage Growth $39,510 $76,373 $115,883 $2,348 $113,536 $77.76 $29,948 $76,373 $105,921 $2,348 $103,573 1.46 Billion $70.94 1.46 Billion Recommendation
- 24. Price Target: $70.94 Current Price: $56.45