Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Starbucks Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 3.2% to 6.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 13, DPO 22, DIO 28). At a 7.4% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 21.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $165.90 per share, suggesting SBUX is undervalued by 82.5% at the current price of $90.92.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 7,046 | 7,413 | 7,784 | 8,194 | 8,715 | 8,933 |
| (−) Net Interest | 588 | 618 | 649 | 683 | 727 | 745 |
| (+) D&A | 2,146 | 2,330 | 2,464 | 2,525 | 2,526 | 2,589 |
| EBITDA | 9,779 | 10,361 | 10,898 | 11,403 | 11,968 | 12,267 |
| (−) Tax | 1,875 | 1,972 | 2,071 | 2,180 | 2,319 | — |
| (−) CapEx | 2,390 | 2,514 | 2,640 | 2,779 | 2,956 | — |
| (−) ΔWC | 220 | 95 | 96 | 106 | 135 | — |
| Free Cash Flow (FCF) | 5,295 | 5,779 | 6,090 | 6,337 | 6,558 | — |
| Peers' EBITDA Multiple | 21.9x | |||||
| Terminal Value | 268,029 | |||||
| WACC / Discount Rate | 7.42% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 5,109 | 5,191 | 5,092 | 4,933 | 4,752 | 187,413 |
| Enterprise Value | 212,491 | |||||
| Projection Period | 25,078 | 11.8% | ||||
| Terminal Value | 187,413 | 88.2% | ||||
| (−) Current Net Debt | 23,392 | |||||
| Equity Value | 189,099 | |||||
| (÷) Outstanding Shares | 1140M | |||||
| Fair Price | $166 | +82.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 17.8x | 19.8x | 21.8x | 23.8x | 25.8x |
|---|---|---|---|---|---|
| 5.4% | $150 | $167 | $183 | $200 | $216 |
| 6.4% | $143 | $159 | $174 | $190 | $206 |
| 7.4% | $136 | $151 | $166 | $181 | $196 |
| 8.4% | $129 | $144 | $158 | $172 | $187 |
| 9.4% | $123 | $137 | $150 | $164 | $178 |
Current price: $90.92. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.