Starbucks Corp (NASDAQ:SBUX) Earnings Model  

Author: Anonymous Contributor 1001, Published: October 24, 2021 Category: Earnings Preview (Prior to the F4Q2021 SBUX Results)
Notes From the Model Developer: The market is expected to grow well over $400 billion in size globally over the next 3 years. Starbucks global revenue reached $7.5 billion in Q3, up 78% from the prior year, driven largely by the performance in the US, their largest market.  I believe that the continued adoption of mobile ordering will be a big driver of revenue in the future:
  • ​​Rewards program drives average ticket price as mobile order transactions are trending upward to 25% in Q3 of 2021 from just 16% in Q3 of 2019. 
  • Increase in comp sales for the Americas
  • Increase in operating margin (decreasing operating expenses as a percentage of revenue)
​There has been faster than expected margin recovery in the Americas due to sales leverage from lapping prior-year COVID-19 impacts and the benefit from continued strength in average ticket. This helped to offset some accelerated investments made in wages as well as inflationary pressures. While my ERP model suggests a more pessimistic view than my forecast, I believe Starbucks has rapidly adapted to new consumer behaviors and strengthened key points of differentiation.  The change in customer experience, new beverage platform, and expanded digital customer relationships will translate to deeper customer engagement and offset the pressure of inflation with sales leverage as it has in the past. 
Multiple-Based Valuation: ​I have applied an average Price-Earnings multiple of 28x for fiscal year 2023 earnings. That resulted in a price target of $125 per share which implies a 2023 non-GAAP EV/EBITDA multiple of 17.7x. 
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​ERP Model Assumptions: Now that inflation is running ahead of the Fed's long-term target, and the test has been met, I believe the Fed will be force to begin a semi-aggressive taper of security purchases and increase the Federal Funds rate. The rise in inflation will be persistent and not transitory. I believe the taper will not be immediate, beginning at the end of 2022, even if unemployment rates do not reach the intended goal. 
SBUX Model.xlsx
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ERP Model.xlsx
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    ​Disclosure: ​The author of this article/model has no financial investment or other conflict of interest related to the subject company or other companies discussed. Any views made or implied in the content represent the author’s opinions.