Yahoo Finance What Is Starbucks Corporation's (NASDAQ:SBUX) Share Price Doing?
Starbucks Corporation (NASDAQ:SBUX) led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. While good news for shareholders, the company has traded much higher in the past year. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Starbucks’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Starbucks
What's The Opportunity In Starbucks?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 3.4% below our intrinsic value, which means if you buy Starbucks today, you’d be paying a fair price for it. And if you believe that the stock is really worth $99.68, then there’s not much of an upside to gain from mispricing. What's more, Starbucks’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of Starbucks look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 35% over the next couple of years, the future seems bright for Starbucks. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? SBUX’s optimistic future growth appears to have been factored into the current share price, 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?
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 positive outlook 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 while earnings quality is important, it's equally important to consider the risks facing Starbucks at this point in time. For instance, we've identified 2 warning signs for Starbucks (1 shouldn't be ignored) you should be familiar with.
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.
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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.
