Starbucks Corp (NASDAQ:SBUX) Earnings Model
Author: Yash Setia, Published: October 23, 2021 Category: Earnings Preview (Prior to the F4Q2021 SBUX Results)
Notes From the Model Developer: I believe that china sales will go up as there is increasing trend of coffee culture in the country which will keep growing in the coming 4-5 years and it is also becoming more popular among the people. In addition, I forecast that coffee cost will go up for Starbucks as I believe that labor cost will increase in coffee making countries which thereby impact of cost at which coffee can be purchased.
Multiple-Based Valuation: I have taken market multiple of 32.0x which is higher than the average of last 3 months as I am bullish about Starbucks due to their growth in China in terms of increased sales in China which is the second largest country for them in contribution to their sales. Also, they have very well emerged from Covid pandemic which creates strong fundamentals of their business and they could portray that through their achievement of highest market share ever away from home.
ERP Model Assumptions: I believe that recent rise in inflation will be an issue in coming time. So, the fed will be needed to increase the federal rate aggressively which will soon be coming in 3Q 2022. The unemployment will remain high and corporate taxes will also increase. All this will result to higher volatile markets and increase in market risk premium.
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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.