Hi all, just looking for someone to sanity check my back of the napkin DCF valuation on SBUX.
I ran a 10 year DCF using the following assumptions:
-Sales grow 10% next year, and decrease at .5% each year for 10 years (5% growth in 2028)
-Terminal g = 3%
-WACC = 7%
-FCF = 12.75% of sales (I noted that CapEx roughly equals D&A so they basically cancel out so I've made FCF = 98% of projected net income)
-Subtracted liabilities and added cash and equivalents.
Long story short, I've come to an equity market cap PV of 99B. SBUX is currently at 68.8B. Curious what anyone else comes to when doing their own assessment.
Lets say that 99B is a good estimate of the companies true PV. Do you think it is a good buy today, or will it take 10 years to really reach that level before treading water at its fully mature value? If it will take 10 years to make 45% thats only about 3.78% per year, a horrible return.
Submitted July 09, 2018 at 07:42PM by InvestingAccount88 https://ift.tt/2L4Te8G
