1 / 16

Starbucks • Green Mountain Coffee • J.M. Smucker • Mondelez International

Processed and Packaged Goods Starbucks Corporation Module 3: Market Multiple Valuation Angie Zhao. Starbucks • Green Mountain Coffee • J.M. Smucker • Mondelez International. STARBUCKS. Background. Founded in Seattle, Washington in 1971

orea
Download Presentation

Starbucks • Green Mountain Coffee • J.M. Smucker • Mondelez International

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Processed and Packaged Goods Starbucks Corporation Module 3: Market Multiple Valuation Angie Zhao Starbucks •Green Mountain Coffee •J.M. Smucker • Mondelez International

  2. STARBUCKS

  3. Background • Founded in Seattle, Washington in 1971 • Premier roaster, marketer & retailer of specialty coffee • Americas, EMEA, China/Asia Pacific • 15.6% market share • Single-serve market - Verismo System • Litigation with Kraft ($2.8b)

  4. Real-Time Data as of 1/24/2014 • Closing Price $74.98 • Market Capitalization $56.50b

  5. Choosing a Performance Measure • Combining estimates • (NEA, BV, EPAT, NI, Sales) • Massive volatility across 3 companies • All are not primarily in the coffee business • Add an industry-specific measure: Sales

  6. Data for Valuation

  7. NEA

  8. Book Value of Common Shareholders’ Equity

  9. EPAT

  10. Net Income

  11. Valuation of Starbucks • Price estimate stood 54% lower than closing price on 2012 YE ($50.71), 69 % lower than closing price on Friday ($74.98) • Traded at 27x earnings • Overvalued the economic success of Starbucks

  12. Valuation of Starbucks • Favorable opinion of investor community • May be attributed to • Acquisition of La Boulange (June 2012) • Acquisition of Teavana (Nov 2012) • Introduction of Verismo System • Past improvements of operating margins • 2013 16.51%, 2012 15.02%, 2011 14.77% • However, overvaluation cannot be justified otherwise

  13. Recommendation • Sell • SBUX stock is vastly overvalued • Way higher than its intrinsic value

  14. Confidence in My Valuation? • Not very confident • Simplicity • Lack of theoretical foundation of a true valuation model • Incomparability among peer companies • Starbucks also roasts its coffee • Coffee is not only primary product of Mondelezand Smuckers • Mondelez is a lot more massive

  15. Any questions?

More Related