Starbucks Corp (NASDAQ:SBUX) Earnings Model
Author: Rohan Jadav, Published: October 28, 2020 2:15pm Category: Earnings Preview (Fiscal 4Q2020)
Model Description: This model predicts earnings and cash flows for Starbucks Corp (NASDAQ:SBUX) driven by estimates of comp-store sales and store count estimates. Ratio analysis is used to complete the financial statements. The Equity Risk Premium Model (ERP) uses the Fed Funds rate, 10-year U.S. Treasury rate, implied volatility, equity market returns, and the Constant Sharpe Approach, to estimate the Equity Risk Premium (ERP). The ERP and the Capital Asset Pricing Model (CAPM) are used together to calculate the required return on equity for the DCF-based share valuation within the Starbucks model.
Modeling Notes From The Developer: I have incorporated the following three items into my modelled forecast: 1) Combination of ‘pandemic fueled shakeup of independent cafes’ and SBUX’s online presence will help in comp sales recovery, 2) China’s tracing and testing programs have helped keep the virus under control. Additional digital partnerships with Alibaba, incentives like stars for everyone and economic recovery will accelerate international comp sales recovery, and 3) WFH extended to Summer’21, which will boost Channel development sales growth...continue reading in the presentation attached below.
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.