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Is Now The Time To Look At Buying Starbucks Corporation (NASDAQ:SBUX)?

Today we're going to take a look at the well-established Starbucks Corporation (NASDAQ:SBUX). The company's stock saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$107 and falling to the lows of US$91.77. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Starbucks' current trading price of US$93.46 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Starbucks’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Starbucks

What Is Starbucks Worth?

According to our valuation model, Starbucks seems to be fairly priced at around 15% below our intrinsic value, which means if you buy Starbucks today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $110.51, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Starbucks has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Starbucks generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Starbucks' earnings over the next few years are expected to increase by 43%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in SBUX’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

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Are you a potential investor? If you’ve been keeping tabs on SBUX, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, Starbucks has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

If you are no longer interested in Starbucks, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.