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SBUX ISIncome Statement - As Reported 10K in
millionsIncome Statement - As Reported 10Q in
millions9/30/139/30/149/30/159/30/169/30/179/30/18TTM12/30
/173/30/186/30/189/30/1812/29/18TTM Company-operated
stores$11,793.2$12,977.9$15,197.3$16,844.1$17,650.719,690.3
20,318.8 Company-operated
stores4,741.84,828.05,060.45,060.1$5,370.3020,318.8 Total
specialty$3,073.6$3,469.9$3,965.4$4,471.8$4,736.15,029.24,95
9.6 Total
specialty1,331.91,203.81,249.91,243.5$1,262.404,959.6
Licensed
stores$1,360.5$1,588.6$1,861.9$2,154.2$2,355.02,652.22,706.9
Licensed stores682.4625.6660.6683.6$737.102,706.9 CPG,
foodservice and
other$1,713.1$1,881.3$2,103.5$2,317.6$2,381.12,377.02,252.7
CPG, foodservice and
other649.5578.2589.3559.9$525.302,252.7Total net
revenues$14,866.8$16,447.8$19,162.7$21,315.9$22,386.8$24,7
19.525,278.4Total net
revenues6,073.76,031.86,310.36,303.6$6,632.7025,278.4 Cost
of sales including occupancy costs-$6,382.3-$6,858.8-$7,787.5-
$8,511.1-$9,038.2-10,174.5-10,434.2 Cost of sales including
occupancy costs-2,502.9-2,516.0-2,554.9-2,604.6($2,758.70)-
10,434.2 Store operating expenses-$4,286.1-$4,638.2-$5,411.1-
$6,064.3-$6,493.3-7,193.2-7,449.2 Store operating expenses-
1,737.0-1,789.6-1,825.0-1,841.6($1,993.00)-7,449.2 Other
operating expenses-$431.8-$457.3-$522.4-$545.4-$553.8-539.3-
532.2 Other operating expenses-141.6-134.3-148.0-
156.7($93.20)-532.2 Depreciation and amortization expenses-
$621.4-$709.6-$893.9-$980.8-$1,011.4-1,247.0-1,321.6
Depreciation and amortization expenses-258.8-331.6-330.0-
326.6($333.40)-1,321.6 General and administrative expenses-
$937.9-$991.3-$1,196.7-$1,360.6-$1,393.3-1,759.0-1,797.8
General and administrative expenses-379.1-405.8-468.7-
460.0($463.30)-1,797.8 Restructuring and
impairments$0.0$0.0$0.0$0.0-$153.5-224.4-240.0
Restructuring and impairments-27.6-134.7-16.9-45.2($43.20)-
240.0 Litigation credit / charge-
$2,784.1$20.2$0.0$0.0$0.0$0.0Income from equity
investees89.452.771.487.7$67.80279.6Income from equity
investees$251.4$268.3$249.9$318.2$391.4301.2279.6Operating
income /
loss1,116.1772.51,038.2956.6$1,015.703,783.0Operating
income / loss-
$325.4$3,081.1$3,601.0$4,171.9$4,134.7$3,883.33,783.0Gain
resulting from acquisition of joint venture1,326.3Net interest
and other income62.3483-$24.8074.9 Gain resulting from
acquisition of joint venture$0.0$0.0$390.6$0.0$0.01,376.4$0.0
Interest income and other, net88.2313239$24.80126.0Loss on
divestiture of certain operations$0.0$0.0-$61.1$0.0$0.0499.2
Interest expense-25.9-503($75.00)-77.0 Interest income and
other, net$123.6$142.7$43.0$108.0$275.3191.4$126.0Earnings
/ loss before income taxes3,005.9363236$965.501,068.7
Interest expense-$28.1-$64.1-$70.5-$81.3-$92.5-170.3-
$77.0Income tax expense / benefit-755.8-35-45-64($205.10)-
349.4Earnings / loss before income taxes-
$229.9$3,159.7$3,903.0$4,198.6$4,317.5$5,780.0$1,068.7Net
earnings / loss including noncontrolling
interests2,250.18161,027932$760.403,534.721.83%Net earnings
/ loss attributable to noncontrolling interests-0.1-156-175-
176$0.20-505.9Income tax expense / benefit$238.7-$1,092.0-
$1,143.7-$1,379.7-$1,432.6-1,262.0-349.4Net earnings / loss
attributable to
Starbucks2,250.0660852756$760.603,028.8Earnings before
cumulative effect of change in accounting
principle$8.8$2,067.7$2,759.3$2,818.9$2,884.9$4,518.0Per
shareNet earnings / loss including noncontrolling
interests$8.8$2,067.7$2,759.3$2,818.9$2,884.9$4,518.0$3,534.
7 Basic1.580.470.620.451.54Net earnings / loss attributable to
noncontrolling interests-$0.5$0.4-$1.9-$1.2-$0.20.3-$505.9
Diluted1.570.470.610.56$0.612.25Net earnings / loss
attributable to
Starbucks$8.3$2,068.1$2,757.4$2,817.7$2,884.7$4,518.3$3,028
.8Weighted average sharesPer share
Basic1,421.01,394.91,377.1-1,240.6
Basic$0.01$1.37$1.84$1.91$1.99$3.27$2.52
Diluted1,434.61,406.61,388.51,348.71,253.4
Diluted$0.01$1.35$1.82$1.90$1.97$3.24$2.25Weighted average
shares Basic1,498.51,506.31,495.91,471.61,449.51,382.7
Diluted1,524.51,526.31,513.41,486.71,461.51,394.6
SBUX BSBalance Sheet - As Reported 10KBalance Sheet - As
Reported
10QTTM9/30/139/30/149/30/159/30/169/30/179/30/18TTM12/3
1/189/30/186/30/183/30/1812/31/17Cash and cash
equivalents4761.68,7561,8922,1423,661 Cash and cash
equivalents$2,575.7$1,708.4$1,530.1$2,128.8$2,462.3$8,756.3$
4,761.6Short-term investments230.218285101107 Short-term
investments$658.1$135.4$81.3$134.4$228.6$181.5$230.2Accou
nts receivable, net721.4693855870852 Accounts receivable,
net$561.4$631.0$719.0$768.8$870.4$693.1$721.4Inventories13
54.61,4011,3871,3761,313
Inventories$1,111.2$1,090.9$1,306.4$1,378.5$1,364.0$1,400.5$
1,354.6Prepaid expenses and other current
assets608.51,4631,3651,169951 Prepaid expenses and other
CA$287.7$285.6$334.2$347.4$358.1$1,462.8$608.5Total
current assets7,67612,4945,5835,6576,884 Deferred income
taxes, net$277.3$317.4$0.0$0.0$0.0$0.0$0.0Long-term
investments265268261293364 Total current
assets$5,471.4$4,168.7$3,971.0$4,757.9$5,283.4$12,494.2$7,67
6.3Equity and cost investments336.1335323298288 Long-term
investments$58.3$318.4$312.5$1,141.7$542.3$267.7$265.0Prop
erty, plant and equipment, net6039.35,9295,6905,5775,379
Equity and cost
investments$496.5$514.9$352.0$354.5$481.6$334.7$336.1Defe
rred income taxes, net650135149165158 Property, plant and
equipment,
net$3,200.5$3,519.0$4,088.3$4,533.8$4,919.5$5,929.1$6,039.3
Other long-term assets472.7412405542526 Deferred income
taxes, net$967.0$903.3$1,180.8$885.4$795.4$134.7$650.0Other
intangible assets981.61,0421,1231,2281,246 Other long-term
assets$185.3$198.9$415.9$403.3$362.8$412.2$472.7Goodwill3
560.33,5423,6483,7943,675 Other intangible
assets$274.8$273.5$520.4$516.3$441.4$1,042.2$981.6Total
Assets19,98124,15617,18217,55318,519
Goodwill$862.9$856.2$1,575.4$1,719.6$1,539.2$3,541.6$3,560
.3Total
assets$11,516.7$10,752.9$12,416.3$14,312.5$14,365.6$24,156.
4$19,981.3Accounts payable1100.51,179921870852Accrued
liabilities, net25642,6482,6712,6114,111 Accounts
payable$491.7$533.7$684.2$730.6$782.51,1791,101Insurance
reserves208.8214215222210 Accrued litigation
charge$2,784.1$0.0$0.0$0.0$0.0$0.0$0.0Stored value card
liability and deferred revenue1554.21,6431,4451,4841,668
Accrued
liabilities$1,269.3$1,514.4$1,755.3$1,999.1$1,934.5$2,298.4$2
,564.0Short-term debt-300- Current portion of long-term
debt$0.0$0.0$0.0$399.9$0.0$349.9$0.0Total current
liabilities5,4285,6845,5525,1876,841 Insurance
reserves$178.5$196.1$224.8$246.0$215.2$213.7$208.8Long-
term debt9130.79,0906,1496,1854,567 Stored value card
liability & deferred
revenue$653.7$794.5$983.8$1,171.2$1,288.5$1,642.9$1,554.2D
eferred revenue6823.76,776-- Total current
liabilities$5,377.3$3,038.7$3,648.1$4,546.8$4,220.7$5,684.2$5
,427.5Other long-term liabilities1478.21,4311484.71,4641,352
Long-term
debt$1,299.4$2,048.3$2,347.5$3,185.3$3,932.6$9,090.2$9,130.
7 Capitalized Long Term
Leases$0.0$0.0$43.9$57.7$55.0$53.6Common stock1.21111
Deferred
revenue$357.7$0.0$0.0$0.0$4.4$6,775.7$6,823.7Additional
paid-in capital41.141414141 Deferred tax & other long term
liabilities$392.2$557.0$632.0$695.9$1,376.9$1,478.2Retained
earnings-25841,4574,1514,6365,835Accumulated other
comprehensive income / loss-343.2-330-20333-125 Common
stock$0.8$0.7$1.5$1.5$1.4$1.3$1.2Noncontrolling
interest6.16677 Additional paid-in
capital$282.1$39.4$41.1$41.1$41.1$41.1$41.1Total
shareholders' equity-2,8851,1703,9914,7115,752 Retained
earnings$4,130.3$5,206.6$5,974.8$5,949.8$5,563.2$1,457.4-
$2,584.0Total equity-2,8791,1763,9974,7185,759 Accum
other comprehensive inc / loss$67.0$25.3-$199.4-$108.4-
$155.6-$330.3-$343.2Total liabilities and
equity19,98124,15617,18217,55318,519 Noncontrolling
interest$2.1$1.7$1.8$6.7$6.9$6.3$6.1 Total shareholders’
equity$4,480.2$5,272.0$5,818.0$5,884.0$5,450.1$1,169.5-
$2,884.9 Total
equity$4,482.3$5,273.7$5,819.8$5,890.7$5,457.0$1,175.8-
$2,878.8Total Liabilities &
Equity$11,516.7$10,752.9$12,416.3$14,312.5$14,365.6$24,156
.4$19,981.3Balance Sheet0000000
SBUX CFCash Flow Statement - As Reported
10K9/30/139/30/149/30/159/30/169/30/179/30/18 Net earnings
including noncontrolling
interests$8.8$2,067.7$2,759.3$2,818.9$2,884.9$4,518.0
Depreciation and
amortization$655.6$748.4$933.8$1,030.1$1,067.1$1,305.9
Litigation charge$2,784.1-------- Deferred income taxes, net-
$1,045.9$10.2$21.2$265.7$95.1$714.9 Income earned from
equity method investees-$171.8-$182.7-$190.2-$250.2-$310.2-
$242.8 Distributions received from equity method
investees$115.6$139.2$148.2$223.3$186.6$226.8
Deconsolidation, gain / loss, amount----$0.0-$6.1-$93.5-$499.2
Gain resulting from acquisition / sale of equity in joint
ventures-$80.1-$70.2-$394.3$0.0$0.0-$1,376.4 Other
excluding gain resulting from acquisition / sale of equity in
joint ventures$23.0$36.2$53.8$45.1$68.9$89.0 Loss on
extinguishment of debt$0.0$0.0$61.1$0.0$0.0$0.0 Stock-
based compensation$142.3$183.2$209.8$218.1$176.0$250.3
Excess tax benefit on share-based awards-$258.1-$114.4-
$132.4-$122.8-$77.5$0.0 Goodwill, impairment loss----
$0.0$0.0$87.2$37.6 Cash provided / used by changes in OA &
Liab$734.8-$2,209.8$278.8$353.0$89.7$6,913.7 Accounts
receivable-$68.3-$79.7-$82.8-$55.6-$96.8$131.0 Other
operating assets and liabilities$422.0$418.3$261.5$248.8-$4.7-
$677.1 Inventories$152.5$14.3-$207.9-$67.5$14.0-$41.2
Accounts payable$88.7$60.4$137.7$46.9$46.4$391.6
Accrued litigation charge$0.0-$2,763.9-------- Stored value
card liability$139.9$140.8$170.3$180.4$130.8$7,109.4Net cash
provided / used by operating activities$3,643.1-
$1,602.0$4,027.9$4,928.1$4,264.0$18,851.5 Purchases of
investments-$785.9-$1,652.5-$567.4-$1,585.7-$674.4-$191.9
Other, net-$11.9-$19.1$6.8$24.9$1,108.8$464.6 Proceeds
from sale and maturity of available-for-sale
securities$60.2$1,454.8$600.6$680.7$1,054.5$459.0 Other-
$11.9-$19.1$6.8$24.9$54.3$5.6 Maturities and calls of
investments$980.0$456.1$18.8$27.9$149.6$45.3 Acquisitions,
net of cash acquired-$610.4$0.0-$284.3$0.0$0.0-$1,311.3
Additions to PP&E excl proceeds from sale of equity in joint
ventures & certain retail oper-$1,151.2-$1,160.9-$1,303.7-
$1,440.3-$1,519.4-$1,976.4 Proceeds from sale of equity in
joint ventures and certain retail
operations$108.0$103.9$8.9$69.6$85.4$608.2Net cash provided
/ used by investing activities-$1,411.20-$817.70-$1,520.30-
$2,222.90-$850.00-$2,361.5 Proceeds from issuance of long-
term debt$749.7$748.5$848.5$1,254.5$750.2$5,584.1
Repayments of long-term debt-$35.2$0.0-$610.1$0.0-
$400.0$0.0 Other excluding repayments of long-term
debt$10.4-$6.9-$18.1-$8.4-$4.4-$41.2 Cash used for purchase
of noncontrolling interest$0.0$0.0-$360.8$0.0$0.0$0.0
Proceeds from issuance of cs excl min tax withholdings on
share-based awards$247.2$139.7$191.8$160.7$150.8$153.9
Minimum tax withholdings on share-based awards-$121.4-
$77.3-$75.5-$106.0-$82.8-$62.7 Excess tax benefit on share-
based awards$258.1$114.4$132.4$122.8$77.5$0.0 Cash
dividends paid-$628.9-$783.1-$928.6-$1,178.0-$1,450.4-
$1,743.4 Repurchase of common stock-$588.1-$758.6-
$1,436.1-$1,995.6-$2,042.5-$7,133.5Net cash used / provided
by financing activities-$108.2-$623.3-$2,256.5-$1,750.0-
$3,001.6-$3,242.8Effect of exchange rate changes on cash and
cash equivalents-$1.8-$34.1-$150.6-$3.5$10.8-$39.5Net
increase / decrease in cash and cash equivalents$2,121.9-
$3,077.1$100.5$951.7$423.2$13,207.7Cash and cash
equivalents beginning of
period$1,188.6$2,575.7$1,708.4$1,530.1$2,128.8$2,462.3Cash
and cash equivalents end of period$3,310.5-
$501.4$1,808.9$2,481.8$2,552.0$15,670.0Supplemental
disclosure Cash paid during the period for Interest, net of
capitalized interest-$34.4-$56.2-$69.5-$74.7-$96.6$137.1
Income taxes, net of refunds-$539.1-$766.3-$1,072.2-$878.7-
$1,389.1-$1,176.9
SegmentSales Segment BreakdownForecasted Sales GrowthSEP
'13SEP '14SEP '15SEP '16SEP '17SEP '18Sep '19Sep '20Sep
'21Sep '22Sep
'23Americas11,00111,98113,29314,79515,62016,732Segment
sales forecasting is required - margins extra creditChina/Asia
Pacific9171,1302,3962,9393,2404,474Details of how you are
forecasting segment is up to you. You willChannel
Development1,4111,5461,7311,9332,2572,297see in rows 64-75
a breakdown in company vs licensed stores & ChannelEurope,
Middle East, & Africa1,1451,2951,2171,1259591,048You can
also look at ticket and transaction. See "Comp Sales" tabAll
Other
Segments394497526524311168Total14,86716,44819,16321,316
22,38724,72000000Growth in
salesAmericas10.7%8.9%11.0%11.3%5.6%7.1%China/Asia
Pacific27.1%23.2%112.1%22.7%10.3%38.1%Channel
Development9.4%9.6%12.0%11.6%16.8%1.8%Europe, Middle
East, & Africa2.1%13.1%-6.0%-7.5%-14.8%9.3%Corporate &
Other88.7%26.2%5.8%-0.3%-40.6%-45.9%TV Growth
rateTotal12.0%10.6%16.5%11.2%5.0%10.4%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!0.0%% of whole
SalesAmericas74.0%72.8%69.4%69.4%69.8%67.7%If you
predict % of the whole and total growth line, back into growth
of each segmentChina/Asia
Pacific6.2%6.9%12.5%13.8%14.5%18.1%If you predict growth
of each segment, then back into % of the wholeChannel
Development9.5%9.4%9.0%9.1%10.1%9.3%Europe, Middle
East, & Africa7.7%7.9%6.3%5.3%4.3%4.2%Corporate &
Other2.6%3.0%2.7%2.5%1.4%0.7%Total100.00%100.00%100.0
0%100.00%100.00%100.0%0.0%0.0%0.0%0.0%0.0%Operating
Income Segment BreakdownForecasted Operating Income
GrowthSEP '13SEP '14SEP '15SEP '16SEP '17SEP '18Sep
'19Sep '20Sep '21Sep '22Sep
'23Americas2,3652,8093,2233,7423,6543,614Growth17.07%18.
76%14.75%16.09%-2.36%-1.07%China/Asia
Pacific321373501632765867Growth4623.53%15.97%34.36%26.
19%21.12%13.39%Europe, Middle East, &
Africa641191681529571Growth-74.58%85.67%41.11%-9.87%-
37.66%-24.87%Channel
Development416557654807967927Growth22.06%34.10%17.35
%23.46%19.78%-4.13%Corporate & Other-3,492-777-945-
1,161-1,345-1,587Growth25.91%-
77.75%21.64%22.83%15.92%17.96%Consolidated Operating
Income-3253,0813,6014,1724,1353,89300000% of wholeSEP
'13SEP '14SEP '15SEP '16SEP '17SEP '18Americas-
726.9%91.2%89.5%89.7%88.4%92.8%China/Asia Pacific-
98.7%12.1%13.9%15.1%18.5%22.3%Europe, Middle East, &
Africa-19.7%3.9%4.7%3.6%2.3%1.8%Channel Development-
127.7%18.1%18.2%19.4%23.4%23.8%Corporate &
Other1073.0%-25.2%-26.2%-27.8%-32.5%-
40.8%Total100.0%100.0%100.0%100.0%100.0%100.0%Forecas
ted Operating Margin GrowthOperating MarginSEP '13SEP
'14SEP '15SEP '16SEP '17SEP '18Sep '18Sep '19Sep '20Sep
'21Sep
'22Americas21.5%23.4%24.2%25.3%23.4%21.6%ERROR:#DIV
/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#
DIV/0!China/Asia
Pacific35.0%33.0%20.9%21.5%23.6%19.4%ERROR:#DIV/0!ER
ROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!
Channel
Development4.6%7.7%9.7%7.8%4.2%3.1%ERROR:#DIV/0!ER
ROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!
Europe, Middle East, &
Africa36.3%43.0%53.7%71.8%100.9%88.5%ERROR:#DIV/0!E
RROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/
0!Corporate & Other-886.8%-156.3%-179.7%-221.4%-432.2%-
942.5%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!ERROR:#DIV/0!ERROR:#REF!ERROR:#REF!ERRO
R:#REF!ERROR:#REF!ERROR:#REF!Total-
2.2%18.7%18.8%19.6%18.5%15.7%ERROR:#DIV/0!ERROR:#
DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!Ameri
casCAPEMEACorporateChannel
DevelopmentTotal2018201720182017201820172018201720182
01720182017Net RevenuesCompany Operated
stores14905.113996.44096.92906575.6551112.7197.319690.317
650.7Licensed
stores18141617.3365.7327.4471.3407.71.22.62652.22355Other1
3.16.3116.81.154.5111.479.7124.5Total
Revenues16732.2156204473.63240.21048958.7168.4311.32297.
32256.624719.522386.8Operating income
GAAP3614.43653.6867.476561.594.5-1587.1-
1345.4927.19673883.3008114134.7Operating income non-
GAAP3647.83657.7867.4765116.6112.4-1451.2-
1213.9927.19674107.7008114288.2Operating Margin
GAAP21.6%23.4%19.4%23.6%5.9%9.9%-942.5%-
432.2%40.4%42.9%15.7%18.5%Operating Margin non
GAAP21.8%23.4%19.4%23.6%11.1%11.7%-861.8%-
389.9%40.4%42.9%16.6%19.2%
Historicals & ForecastsHistorical and Forecasted
ValuesRevenue Growth Driven by
…201320142015201620172018TTM20192020202120222023Seg
ment?Transaction and Price?<---------------------- Historical ---
-----------------><---------------------- Projection ------------------
-->% Change in
Revenue201320142015201620172018TTM201920202021202220
23TVOverall Revenue growth
rate10.6%16.5%11.2%5.0%10.4%2.3%Growth rates should be
connected to segment tabCompany Operated
Revenue10.0%17.1%10.8%4.8%11.6%3.2%Or can build up
growth rates in rows 4 thru … in thisLicensed Store
Revenue16.8%17.2%15.7%9.3%12.6%2.1%tab based on
alternative forecastingCPG & Other9.8%11.8%10.2%2.7%-
0.2%-5.2%Same Store Sales
Systemwide7%6%7%5%3%2%4%Same Store
Americas7%6%7%6%3%2%4%Same Store
CAP9%7%9%3%3%1%3%% of SalesCost of salesCost of sales
wo depreciation & amortizationStore operating expensesOther
operating incom expenseGross Profit MarginTotal Depreciation
and Amortization expensesRemember part of d&a was in COGS
- get total from CF statementGeneral & administrative
expensesRestructuring & impairments & LitigationI'm assuming
these costs are non-recurring as the majority ofIncome from
equity investorsrestructuring seems to be done. If you disagree,
add this cost inEBIT Margin GAAPNon-GAAP EBIT
MarginNon-GAAP EBITDA MarginTax rate (effective tax
rate)103.8%34.6%29.3%32.9%33.2%21.8%Capital Expenditures
use Net PPE % of salesuse PPE1 - PPE0 + DepreciationCapital
Expenditures using CF Stmt % of salesUse CF Statement
methodAcquisitions4.1%0.0%1.5%0.0%0.0%5.3%only forecast
if ongoing and if so incl in DCF% of Given Intangible and
PP&E as notedAmortization as a % of Intangible
AssetsDepreciation as a % of PP&E% of Given Intangible and
PP&E as notedAmortization as a % of Intangible
AssetsDepreciation as a % of PP&EInvested Capital (% of Sales
or
Days)201320142015201620172018TTM20192020202120222023
Cash and Cash Equivalents (actual)Operating Cash (% of sales -
hard coded in)do not assume 2% unless appropriate - look at
historical numbers (below) and peer dataDays Sales
OutstandingDays Inventory OutstandingPrepaid Expenses (% of
sales)Days Payables OutstandingAccrued liabilities % of
SalesInsurance Reserves % of SalesStored Value card liability
% of SalesCash Conversion
Cycle0.000.000.000.000.000.000.000.000.000.000.000.00% of
SalesEquity & Cost InvestmentsPlant, property & equip,
netIntangible AssetsNet investment in direct financing
leasesOther assets net of Other liabilities$
millionsGoodwill862.9856.21575.41719.61539.23541.63560.3H
istorical Cash and
Revenue2005200620072008200920102011201220132014201520
1620172018Cash and Cash
Equivalents3003134383236661450205120373233.81843.81611.
42263.22690.98937.799805Total Sales
Revenue63697787941110383977510707117001330014866.8164
47.819162.721315.922386.824719.500976Cash as a % of
Revenue4.71%4.02%4.65%3.11%6.81%13.54%17.53%15.32%2
1.75%11.21%8.41%10.62%12.02%36.16%Avg prior toLong
termSince '12ultra low ratesaverageaverageCash as a % of
Revenue4.12%10.28%13.22%Left out 2018 as that was the year
they tripled their leverage
ROICROIC & Economic ProfitROIC Including
Goodwill20132014201520162017201820192020202120222023R
eturn on avg invested
capital0.0%0.0%0.0%0.0%0.0%0.0%ERROR:#DIV/0!ERROR:#
DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!Return on avg invested
capital with oper leaseReturn on avg unadjusted invested
cap47.0%46.4%47.0%43.6%38.6%0.0%0.0%0.0%0.0%0.0%Retu
rn on avg unadjusted invested cap w lease$
Millions20132014201520162017201820192020202120222023Ec
onomic profit capital chargeEconomic profit spreadNOPLAT
(adjusted
values)20132014201520162017201820192020202120222023Tot
al
Revenues14,866.816,447.819,162.721,315.922,386.824,719.5Ca
n break this down by geography or Company/ Licensed/
CPGCompany Operated
Sales11,793.212,977.915,197.316,844.117,650.719,690.3Licens
ed Store Sales1,360.51,588.61,861.92,154.22,355.02,652.2CPG
& Other1,713.11,881.32,103.52,317.62,381.12,377.0Cost of
sales(6,382.3)(6,858.8)(7,787.5)(8,511.1)(9,038.2)(10,174.5)Co
st of sales wo depreciation &
amortization(6,348.1)(6,820.0)(7,747.6)(8,461.8)(8,982.5)(10,1
15.6)Store operating
expenses(4,286.1)(4,638.2)(5,411.1)(6,064.3)(6,493.3)(7,193.2)
Other operating incom
expense(431.8)(457.3)(522.4)(545.4)(553.8)(539.3)Gross
Profit3,800.84,532.35,481.66,244.46,357.26,871.4Total
Depreciation and Amortization
expenses(655.6)(748.4)(933.8)(1,030.1)(1,067.1)(1,305.9)0.00.0
0.00.00.0General & administrative
expenses(937.9)(991.3)(1,196.7)(1,360.6)(1,393.3)(1,759.0)Rest
ructuring & impairments &
Litigation(2,784.1)20.20.00.0(153.5)(224.4)I am assuming this
is non-recurring. If you believe differently, then includeIncome
from equity
investors251.4268.3249.9318.2391.4301.2EBIT(325.4)3,081.13,
601.04,171.94,134.73,883.30.00.00.00.00.0Reported Operating
Income
GAAP(325.4)3,081.13,601.04,171.94,134.73,883.3Adjusted
Operating Income Non-
GAAP2,458.73,060.93,601.04,171.94,288.24,107.70.00.00.00.0
0.0Tax expenseNOPLAT Non-GAAPNon-GAAP
EBITDADepreciation and Amortization CF
Stmt655.6748.4933.81,030.11,067.11,305.90.00.00.00.00.0Depr
eciation and Amortization Inc
Stmt621.4709.6893.9980.81,011.41,247.0Break Out
Depreciation & Amortization
(10K)DepreciationAmortizationCapital Expenditures using Net
PPE formulause Net PPE1 - Net PPE0 + DepreciationCapital
Expenditures using CF
STMT1,151.21,160.91,303.71,440.31,519.41,976.4use % of
sales methodAcquisitions (only incl in FCF if ongoing
strategy)610.40.0284.30.00.01,311.3only forecast if ongoing
and if so incl in DCFInvested Capital$
millions20132014201520162017201820192020202120222023O
perating Cash0.00.00.00.00.00.0Accounts
receivable561.4631.0719.0768.8870.4693.1Inventories1111.210
90.91306.41378.51364.01400.5Prepaid expenses and other
current assets287.7285.6334.2347.4358.11462.8Operating
current assets1960.32007.52359.62494.72592.53556.4Accounts
payable491.7533.7684.2730.6782.51,179.3Accrued expenses
and other current
liabilities1,269.31,514.41,755.31,999.11,934.52,298.4Insurance
Reserves178.5196.1224.8246.0215.2213.7Stored Card &
Deferred
Revenue653.7794.5983.81,171.21,288.51,642.9Operating
current
liabilities2,593.23,038.73,648.14,146.94,220.75,334.3Operating
working capital-632.9-1,031.2-1,288.5-1,652.2-1,628.2-
1,777.9Equity & Cost
Investments496.5514.9352.0354.5481.6334.7Plant, property &
equip, net3200.53519.04088.34533.84919.55929.1Other LT
Assets185.3198.9415.9403.3362.8412.2Intangible
assets274.8273.5520.4516.3441.41042.2Goodwill862.9856.2157
5.41719.61539.23541.6Deferred
Revenue(357.7)0.00.00.0(4.4)(6,775.7)Invested
Capital4,029.44,331.35,663.55,875.36,111.92,706.2Total Funds
Invested (Sources)Current portion of LT
Debt0.00.00.0399.90.0349.9Long-term
debt1299.42048.32347.53185.33932.69090.2Capitalized Lease
Obligations0.00.043.957.755.053.6Total
Debt1299.42048.32391.43642.93987.69493.7Deferred Income
Tax-1244.3-828.5-623.8-253.4-99.51242.2Total Debt &
Equivalents55.11219.81767.63389.53888.110735.9Shareholder
Equity4482.35273.75819.85890.75457.01175.8Equity & Equity
Equivalents4482.35273.75819.85890.75457.01175.8Non-
operating AssetsExcess
Cash3233.81843.81611.42263.22690.98937.8Investments58.331
8.4312.51141.7542.3267.7Litigation Charge-
2784.10.00.00.00.00.0Total Non-operating
assets508.02162.21923.93404.93233.29205.5Adjusted Invested
Capital4,029.44,331.35,663.55,875.36,111.92,706.2Check
invested
capitalbalancebalancebalancebalancebalancebalanceUnadjusted
Invested
Capital5781.77322.08211.29533.69444.610669.57963.37963.37
963.37963.37963.3
WACCStarbucks CorporationSettlement3/7/19Price History:
Beta3 yearCan choose other time periods if relevant Amount
Outstanding in millions of USD5 yearBalance SheetInstrument
IDDescriptionAmount OutCoupon RateCoupon TypeIssue
DateMaturity DateIssue CurrSeniorityPriceYTWMarket Value%
of
TotalSBUXS&PNotes/BondsDatePriceDatePrice855244AL3Star
bucks Corp500.00.022Fixed11/201711/2020USDSNR
Unsec98.86103/01/1970.8503/01/192803.691855244AJ8Starbuc
ks Corp750.00.021Fixed02/201602/2021USDSNR
Unsec98.492.91202/22/1971.302/22/192792.6710222261855244
AG4Starbucks Corp500.00.027Fixed06/201506/2022USDSNR
Unsec99.043.01302/15/1970.7102/15/192775.597100523855244
AD1Starbucks Corp750.00.0385Fixed09/201310/2023USDSNR
Unsec102.563.21402/08/1969.7502/08/192707.88038489778552
44AN9Starbucks
Corp1,000.00.031Fixed02/201803/2023USDSNR
Unsec99.823.15502/01/1968.1102/01/192706.533459959385524
4AQ2Starbucks
Corp1,250.00.038Fixed08/201808/2025USDSNR
Unsec101.323.56601/25/1967.0901/25/192664.76050957338552
44AK5Starbucks
Corp500.00.0245Fixed05/201606/2026USDSNR
Unsec91.93.73701/18/1964.701/18/192670.7117125111855244A
P4Starbucks Corp600.00.035Fixed02/201803/2028USDSNR
Unsec97.713.8801/11/1963.7301/11/192596.257301564855244A
R0Starbucks Corp750.04.000%Fixed08/201811/2028USDSNR
Unsec101.353.83901/04/1963.5701/04/192531.94341155585524
4AH2Starbucks Corp350.00.043Fixed06/201506/2045USDSNR
Unsec93.84.711012/28/1863.3912/28/182485.735215544185524
4AM1Starbucks
Corp500.00.0375Fixed11/201712/2047USDSNR
Unsec4.721112/21/1861.3912/21/182416.6183852099855244AS
8Starbucks Corp1,770.30.045Fixed08/201811/2048USDSNR
Unsec96.374.731212/14/1865.3412/14/182599.95434572981312
/07/1865.4712/07/182633.078820587Book ValueMarket
Value1411/30/1866.7211/30/182760.17425656321511/23/1865.
711/23/182632.5566345943Weighted Avg
Kd1611/16/1868.1611/16/182736.26898803571711/09/1868.611
/09/182781.0091567204MV (millions)Cap StructureDefault
Risk Prem1811/02/1864.3211/02/182723.0582781224MV
DebtKd with
spread1910/26/1858.0710/26/182658.6851131378MV
Equity2010/19/1858.6610/19/182767.7804874457Total
capitalInterest
Expense2110/12/1856.4510/12/182767.126018181Kd with BV
Debt2210/05/1855.7610/05/182885.5662522712BetaUnlevered
Beta2309/28/1856.8409/28/182913.978139886Risk freeSecurity
Usedsource with a screen
shot2409/21/1857.4509/21/182929.6671956253Equity Risk
premiumMethod
Used2509/14/1854.7509/14/182904.9753853014Cost of Equity
(Ke)2609/07/1854.8609/07/182871.68152830212708/31/1853.45
08/31/182901.5176770405Tax
Rate2808/24/1852.7508/24/182874.6891438911WACC w/
Weighted Avg
MV2908/17/1853.5608/17/182850.1316116041WACC w/
Default Prem
MV3008/10/1851.5108/10/182833.28363168223108/03/1852.23
08/03/182840.3535543808BV (millions)Cap StructureWACC
Results3207/27/1852.1507/27/182818.8176262962BV
Debt$0.00Market
Value0.00%3307/20/1850.9107/20/182801.8280880917BV
EquityMarket
Value0.00%3407/13/1851.6207/13/182801.3113726617Total
capitalBook
Value0.00%3507/06/1848.9807/06/182759.82191582513606/29/
1848.8506/29/182718.3734650222WACC w/
BV3706/22/1851.2406/22/182754.87699510963806/15/1857.110
6/15/182779.6630272875YTD3906/08/1856.606/08/182779.028
5906191Historical20132014201520162017201820194006/01/18
56.9106/01/182734.6188550041Fiscal Yr End Share
Price$38.49$37.73$56.84$54.14$53.71$56.84$70.854105/25/18
57.9205/25/182721.3279562726Basic shs
outstanding1,498.501,506.301,495.901,471.601,449.501,382.70
1,244.004205/18/1857.1605/18/182712.9747135606Diluted shs
outstanding1,524.501,526.301,513.401,486.701,461.501,394.60
1,253.404305/11/1857.2705/11/182727.71592755584405/04/185
7.6805/04/182663.42033730044504/27/1858.3604/27/182669.90
62717154604/20/185804/20/182670.14175564744704/13/1859.2
404/13/182656.29690565364804/06/1858.3404/06/182604.4693
8452934903/29/1857.8903/29/182640.86599032935003/23/1856
.3103/23/182588.26279205135103/16/185903/16/182752.01178
754965203/09/1858.4603/09/182786.56510275315303/02/1856.
9303/02/182691.25276867665402/23/1856.1402/23/182747.298
54916935502/16/1856.4802/16/182732.21983679725602/09/185
4.5802/09/182619.54559492315702/02/1855.7702/02/182762.12
533427265801/26/1857.9901/26/182872.86783924315901/19/18
61.2601/19/182810.3026834926001/12/1860.401/12/182786.244
14318656101/05/1859.6101/05/182743.14777329756212/29/175
7.4312/29/172673.61052315176312/22/1757.312/22/172683.337
27433146412/15/1758.2912/15/172675.80798122696512/08/175
8.6112/08/172651.50100027346612/01/1757.3212/01/172642.21
576474666711/24/1756.811/24/172602.42470781256811/17/175
6.9311/17/172578.85432396386911/10/1757.0411/10/172582.30
003925497011/03/1756.0311/03/172587.83605703797110/27/17
54.8810/27/172581.06570313437210/20/1754.5710/20/172575.2
0587788917310/13/1755.7210/13/172553.16937285037410/06/1
755.1710/06/172549.33150890217509/29/1753.7109/29/172519.
35967190617609/22/1755.0909/22/172502.22222454067709/15/
1754.6709/15/172500.22585762027809/08/1753.4909/08/17246
1.43364392227909/01/1754.9309/01/172476.55238938888008/2
5/1754.3608/25/172443.04579834118108/18/1752.708/18/17242
5.55216966468208/11/1753.1808/11/172441.32024056448308/0
4/1755.4408/04/172476.83099654618407/28/175407/28/172472.
0985372068507/21/1757.9807/21/172472.5358544528607/14/17
58.7607/14/172459.27099082148707/07/1758.0407/07/172425.1
7696142638806/30/1758.3106/30/172423.4088910638906/23/17
59.8106/23/172438.29691186319006/16/1760.1406/16/172433.1
5082886149106/09/1762.1906/09/172431.77236500319206/02/1
764.5706/02/172439.07024998039305/26/1763.305/26/172415.8
2248039039405/19/1761.3605/19/172381.72670416759505/12/1
759.9305/12/172390.89722613839605/05/1760.9505/05/172399.
2857104259704/28/1760.0604/28/172384.19551781389804/21/1
760.6104/21/172348.6949580629904/13/1757.5104/13/172328.9
53347491610004/07/1758.0204/07/172355.544991713410103/3
1/1758.3903/31/172362.718220397310203/24/1756.8103/24/172
343.978139911410303/17/1755.7803/17/172378.253051299310
403/10/1754.5303/10/172372.597751765210503/03/1757.103/03
/172383.1170365810602/24/1757.4802/24/172367.34424697251
0702/17/1757.3502/17/172351.16169922310802/10/1756.2202/1
0/172316.097069587110902/03/1755.0602/03/172297.41585705
6111001/27/1756.1201/27/172294.689728906911101/20/1757.6
601/20/172271.314729237711201/13/1757.8501/13/172274.637
742895211301/06/1757.1301/06/172276.981444562111412/30/1
655.5212/30/162238.826681707611512/23/1657.0112/23/16226
3.788658550911612/16/1657.6612/16/162258.07240233281171
2/09/1658.7512/09/162259.52867686511812/02/1657.2112/02/1
62191.953667101611911/25/1657.4311/25/162213.3485684312
12011/18/1655.7711/18/162181.901786964212111/11/1653.931
1/11/162164.45075019112211/04/1652.7511/04/162085.176376
976312310/28/1653.5310/28/162126.4075651112410/21/1653.6
310/21/162141.161911436912510/14/1653.0810/14/162132.978
465079212610/07/1653.4610/07/162153.739363428412709/30/1
654.1409/30/162168.272089637312809/23/1654.4309/23/16216
4.694807617912909/16/1653.7409/16/162139.16460301541300
9/09/1654.3509/09/162127.805573848813109/02/1656.1809/02/
162179.984202579113208/26/1657.2908/26/162169.040232267
513308/19/1654.9408/19/162183.868154788913408/12/1655.47
08/12/162184.05093984913508/05/1655.908/05/162182.868374
886113607/29/1658.0507/29/162173.603859888413707/22/1657
.907/22/162175.029062357913807/15/1657.4107/15/162161.741
334034613907/08/1656.5107/08/162129.897981779914007/01/1
656.9907/01/162102.953492236714106/24/1654.6806/24/16203
7.405184363414206/17/1655.3106/17/162071.21969456881430
6/10/1654.86506/10/162096.071013309214406/03/1654.6106/03
/162099.128574026714505/27/1655.1505/27/162099.060460947
714605/20/1654.6205/20/162052.318052897814705/13/1655.82
05/13/162046.612922614214805/06/1656.3105/06/162057.1424
21360614904/29/1656.2304/29/162065.296301005115004/22/16
57.6804/22/162091.580101870615104/15/1660.5104/15/162080.
732964823415204/08/1661.0404/08/162047.597132405215304/
01/1661.0204/01/162072.779072250315403/24/1658.3603/24/16
2035.935905695515503/18/1659.703/18/162049.576776601815
603/11/1657.5903/11/162022.189572238715703/04/1658.703/04
/161999.987225858815802/26/1658.3402/26/161948.053851304
15902/19/1657.6702/19/161917.78361174516002/12/1655.8602/
12/161864.775330089816102/05/1654.4902/05/161880.0539328
83916201/29/1660.7701/29/161940.239677818416301/22/1659.
1701/22/161906.904075585716401/15/165801/15/161880.32779
6386716501/08/1656.6301/08/161922.03479267416612/31/1560
.0312/31/152043.936862660716712/24/1560.3212/24/152060.98
8299851116812/18/1558.6212/18/152005.549716912216912/11/
1559.8212/11/152012.373697598217012/04/1561.7512/04/1520
91.687423832917111/27/1562.1811/27/152090.1067763178172
11/20/1561.9911/20/152089.166223191217311/13/1559.7411/13
/152023.039432971217411/06/1561.9711/06/152099.203489927
317510/30/1562.5710/30/152079.359837467217610/23/1562.61
10/23/152075.151278069417710/16/1559.9310/16/152033.1103
96569217810/09/1560.0710/09/152014.892646131917910/02/15
58.0810/02/151951.359831429618009/25/1557.9909/25/151931.
339903187618109/18/1556.8409/18/151958.032829434418209/
11/1556.5309/11/151961.045671910718309/04/1554.2809/04/15
1921.224403313618408/28/1555.6308/28/151988.87140722718
508/21/1552.8408/21/151970.889064541418608/14/1557.108/14
/152091.543640894218708/07/1557.208/07/152077.5684171683
18807/31/1557.9307/31/152103.835365137118907/24/1557.290
7/24/152079.649212624619007/17/1555.6907/17/152126.64394
3924219107/10/1554.5707/10/152076.618352355719207/02/155
4.2407/02/152076.77570025719306/26/1554.6206/26/152101.48
7386961519406/19/1553.9306/19/152109.988278001119506/12/
1552.6306/12/152094.105654248319606/05/1552.1906/05/1520
92.830948425619705/29/1551.9605/29/152107.3895783551198
05/22/1551.4805/22/152126.061408869219905/15/1550.805/15/
152122.734129766420005/08/1549.7805/08/152116.095111675
520105/01/1550.2905/01/152108.290280508620204/24/1551.84
04/24/152117.689928749120304/17/1547.6204/17/152081.1777
53690220404/10/1548.1704/10/152102.055348808920504/02/15
47.19504/02/152066.964854166120603/27/1547.53503/27/1520
61.021996810120703/20/1548.7303/20/152108.0973212684208
03/13/1546.64503/13/152053.398255701720903/06/1546.10750
3/06/152071.262106305721002/27/1546.742502/27/152104.503
249324321102/20/1546.75502/20/152110.300899164321202/13/
1545.7902/13/152096.987901915121302/06/1544.502/06/15205
5.472241825721401/30/1543.76501/30/151994.9904120547215
01/23/1544.1101/23/152051.821811776321601/16/1540.30501/1
6/152019.418653780221701/09/1539.89501/09/152044.8099000
57821801/02/1540.7201/02/152058.204778724321912/26/1440.
91512/26/142088.766062837922012/19/1439.7212/19/142070.6
46955389222112/12/1441.62512/12/142002.334239680222212/
05/1441.78512/05/142075.368192627622311/28/1440.60511/28/
142067.56204452722411/21/1439.8811/21/142063.5024452877
22511/14/1439.0611/14/142039.816872100922611/07/1438.895
11/07/142031.921516876922710/31/1437.7810/31/142018.0545
03296422810/24/1437.90510/24/141964.580296631522910/17/1
436.7710/17/141886.764039916623010/10/1437.2310/10/14190
6.12968272123110/03/1437.94510/03/141967.90207875752320
9/26/1437.58509/26/141982.845938128923309/19/1438.03509/1
9/142010.396723604323409/12/1437.73509/12/141985.5362909
21423509/05/1438.97509/05/142007.711908239123608/29/1438
.90508/29/142003.367695451323708/22/1438.6408/22/141988.4
02434926823808/15/1438.45508/15/141955.062629353623908/
08/1438.8108/08/141931.59315127824008/01/1438.4908/01/141
925.151800196924107/25/1439.3707/25/141978.338887822524
207/18/1438.9707/18/141978.218353696424307/11/1439.307/11
/141967.569161226924407/03/1439.5307/03/141985.437118063
624506/27/1438.9706/27/141960.960515834824606/20/1438.30
6/20/141962.873446499624706/13/1437.34506/13/141936.1593
52325124806/06/1437.66506/06/141949.440726149524905/30/1
436.6205/30/141923.572660658425005/23/1435.9905/23/14190
0.533228592625105/16/1435.4705/16/141877.85527318812520
5/09/1435.14505/09/141878.475687840425305/02/1435.305/02/
141881.138137535425404/25/1435.72504/25/141863.40067144
0125504/17/1435.07504/17/141864.851377063325604/11/1434.
36504/11/141815.685087153625704/04/1435.77504/04/141865.
09341386925803/28/1436.8503/28/141857.620787361125903/2
1/1438.35503/21/141866.520737280526003/14/1437.13503/14/1
41841.13350895226103/07/1436.53503/07/141878.0391851899
02/28/1435.4802/28/141859.4493719912
DCFHistorical valuesForecasted
Values(millions)201320142015201620172018CAGR201920202
02120222023TVSales14,866.816,447.819,162.721,315.922,386.
824,719.50.00.00.00.00.0growth
rate10.6%16.5%11.2%5.0%10.4%10.7%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!0.0%COGS11,066.011,915.513,681.115,071.516,029.
617,848.10.00.00.00.00.0Gross
profit3,800.84,532.35,481.66,244.46,357.26,871.40.00.00.00.00
.0gross
margin25.6%27.6%28.6%29.3%28.4%27.8%ERROR:#DIV/0!ER
ROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!
SG&A937.9991.31196.71360.61393.31759.00.00.00.00.00.0Oth
er income
(expense)251.4268.3249.9318.2391.4301.20.00.00.00.00.0EBIT
DA3,114.33,809.34,534.85,202.05,355.35,413.6EBITDA
margin20.9%23.2%23.7%24.4%23.9%21.9%11.7%ERROR:#DI
V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:
#DIV/0!EBITDA growth22.3%19.0%14.7%2.9%1.1%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!Depreciation &
Amortization655.6748.4933.81030.11067.11305.90.00.00.00.00.
0EBIT2,458.73,060.93,601.04,171.94,288.24,107.70.00.00.00.0
0.0EBIT or Operating
margin16.5%18.6%18.8%19.6%19.2%16.6%10.8%ERROR:#DI
V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:
#DIV/0!EBIT growth24.5%17.6%15.9%2.8%-4.2%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!tax
expense536.8668.3786.2910.9936.3896.90.00.00.00.00.0NOPL
AT1,921.92,392.62,814.83,261.03,351.93,210.8plus: Depr and
Amortization655.6748.4933.81,030.11,067.11,305.90.00.00.00.0
0.0less:
Capex1,151.21,160.91,303.71,440.31,519.41,976.411.4%Decide
which method you are using for capexless: Change NWC734.8-
398.3-257.3-363.724.0-
149.7FCF2,161.11,581.82,187.62,487.12,923.62,390.6Investme
nt Rate-
12.45%33.89%22.28%23.73%12.78%25.54%ERROR:#DIV/0!E
RROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/
0!Net Reinvestment-
239.2810.8627.2773.9428.3820.20.00.00.00.00.0ERROR:#DIV/
0!TimeWACCPV of FCFMultiple Approach to Terminal
ValueImpliedKeyFCFgrowthEquity Value w/
MultipleDrivergrowthSum of PV FCF- 0Enterprise
Value0.0Terminal ROICwhen deciding LT ROIC, look at
historical, industry and numbers that make the investment rate
make senseExit Multiple (EV/EBITDA)Less: debtTerminal
growth rate0.00%0.00%EBITDA (2023)0.0Terminal
ValueTerminal ValuePV Terminal Value- 0- 0PV Terminal
Value0.0Equity ValueEnterprise Value- 0- 0% of Enterprise
ValueERROR:#DIV/0!% of Enterprise
ValueERROR:#DIV/0!ERROR:#DIV/0!Enterprise Value-
0Shares outstandingEquity ValueEquity Value/
shareERROR:#DIV/0!Equity Value/
shareERROR:#DIV/0!ERROR:#DIV/0!DeviationERROR:#DIV/
0!Equity ValueExit MultipleEquity ValuePerpetuity Growth
RateWACCWACCToggleWACCDon't automatically use my
variation on yourEV/EBITDAsensitivity analysis. Determine
what makesgsense for SBUX given their historyTTM
EPSMultipleROICImplied Equity Value/
shareERROR:#DIV/0!ERROR:#DIV/0!Implied P/E
RatioERROR:#DIV/0!ERROR:#DIV/0!Historical Average P/E
ratio26.58fiscalexcluded 2013 as an outlierHistorical Average
P/E ratio27.50CalendarCurrent Ratio28.17LT Industry
AverageMultipleROICImplied Enterprise
Value$0.00$0.00Implied EV/EBITDA Ratio0.000.00Historical
Average EV/EBITDA ratio LT14.60Historical Average
EV/EBITDA ratio 5 yr20.96Current EV/EBITDA14.61 LT
Industry Average
DCF w oper leaseHistorical valuesForecasted
Values(millions)201320142015201620172018CAGR201920202
02120222023TVSales14,866.816,447.819,162.721,315.922,386.
824,719.50.00.00.00.00.0growth
rate10.6%16.5%11.2%5.0%10.4%10.7%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!COGS11,066.011,915.513,681.115,071.516,029.617,8
48.10.00.00.00.00.0Gross
profit3,800.84,532.35,481.66,244.46,357.26,871.40.00.00.00.00
.0gross
margin25.6%27.6%28.6%29.3%28.4%27.8%ERROR:#DIV/0!ER
ROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!
SG&A937.9991.31196.71360.61393.31759.00.00.00.00.00.0Oth
er income
(expense)251.4268.3249.9318.2391.4301.20.00.00.00.00.0EBIT
DA3,114.33,809.34,534.85,202.05,355.35,413.6EBITDA
margin20.9%23.2%23.7%24.4%23.9%21.9%11.7%ERROR:#DI
V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:
#DIV/0!EBITDA growth22.3%19.0%14.7%2.9%1.1%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!Depreciation &
Amortization655.6748.4933.81030.11067.11305.90.00.00.00.00.
0EBIT2,458.73,060.93,601.04,171.94,288.24,107.70.00.00.00.0
0.0EBIT or Operating
margin16.5%18.6%18.8%19.6%19.2%16.6%10.8%ERROR:#DI
V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:
#DIV/0!EBIT growth24.5%17.6%15.9%2.8%-4.2%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!tax
expense536.8668.3786.2910.9936.3896.90.00.00.00.00.0NOPL
AT1,921.92,392.62,814.83,261.03,351.93,210.8plus: Depr and
Amortization655.6748.4933.81,030.11,067.11,305.90.00.00.00.0
0.0less:
Capex1,151.21,160.91,303.71,440.31,519.41,976.411.4%Decide
which method you are using for capexless: Change NWC734.8-
398.3-257.3-363.724.0-
149.7FCF2,161.11,581.82,187.62,487.12,923.62,390.6Investme
nt Rate-
12.45%33.89%22.28%23.73%12.78%25.54%ERROR:#DIV/0!E
RROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/
0!Net Reinvestment-
239.2810.8627.2773.9428.3820.20.00.00.00.00.0TimeWACCPV
of FCFMultiple Approach to Terminal
ValueImpliedKeyFCFgrowthEquity Value w/
MultipleDrivergrowthSum of PV FCF- 0Enterprise
Value0.0Terminal ROICwhen deciding LT ROIC, look at
historical, industry and numbers that make the investment rate
make senseExit Multiple (EV/EBITDA)Less: debtTerminal
growth rate0.00%0.00%EBITDA (2023)0.0Terminal
ValueTerminal ValuePV Terminal Value- 0- 0PV Terminal
Value0.0Equity ValueEnterprise Value- 0- 0% of Enterprise
ValueERROR:#DIV/0!% of Enterprise
ValueERROR:#DIV/0!ERROR:#DIV/0!Enterprise Value-
0Shares outstandingEquity ValueEquity Value/
shareERROR:#DIV/0!Equity Value/
shareERROR:#DIV/0!ERROR:#DIV/0!DeviationERROR:#DIV/
0!Equity ValueExit MultipleEquity ValuePerpetuity Growth
RateWACCWACCToggleWACCDon't automatically use my
variation on yourEV/EBITDAsensitivity analysis. Determine
what makesgsense for SBUX given their historyTTM
EPSMultipleROICImplied Equity Value/
shareERROR:#DIV/0!ERROR:#DIV/0!Implied P/E
RatioERROR:#DIV/0!ERROR:#DIV/0!Historical Average P/E
ratio26.58fiscalexcluded 2013 as an outlierHistorical Average
P/E ratio27.50CalendarCurrent Ratio28.17LT Industry
AverageMultipleROICImplied Enterprise
Value$0.00$0.00Implied EV/EBITDA Ratio0.000.00Historical
Average EV/EBITDA ratio LT14.60Historical Average
EV/EBITDA ratio 5 yr20.96Current EV/EBITDA14.61 LT
Industry Average
Operating LeasesRentAdjustedPMTTimeLeaseLeasePV
LeaseFormulasRent PMTLease201801424.5Avg lease life =
Year 6 Lease/ average yrs 1-5201801424.52019113451345Depr
Exp = PV oper lease/ lease
life201911345202021277.61277.6Adj Debt = Debt + PV oper
Lease202021277.6202131194.51194.5Adj Invested Capital =
Adj Debt + Equity202131194.5202241091.51091.5Adj EBIT =
EBIT - rent exp + depr lease
exp202241091.520235962.2962.2Adj ROIC = Adj EBIT (1-t)/
Adj Invested
Capital20235962.2202463541.020246354178kdAvg yr 1-5Sum
PV LeaseAvg lease lifeDepr expNo
adjustmentEBIT4,107.7Debt9,493.7Inv
Capital10,669.5Equity1,175.8Tax
rate21.8%D/E8.07ROIC30.09%PP&E5,929.1With
adjustmentEBIT w/ adjust5,452.7Debt w/ adjust9,493.7Inv
Capital10,669.5Equity1,175.8Tax
rate21.8%D/E8.07ROIC39.95%PP&E adjusted5,929.1
Cash & Capex PeersSpecific CompetitorsMcDonaldsDEC
'18DEC '17DEC '16DEC '15DEC '14DEC '13DEC '12DEC
'11DEC '10DEC '09DEC '08 Cash and
equivalents8662,4641,2237,6862,0782,7992,3362,3362,3871,79
62,063Total
revenues21,02522,82024,62225,41327,44128,10627,56727,0062
4,07522,74523,522 Capital
expenditures2,7421,8541,8211,8142,5832,8253,0492,7302,1361,
9522,136Cash as % of
Sales4.12%10.80%4.97%30.24%7.57%9.96%8.47%8.65%9.92%
7.90%8.77%Capital expenditure as a % of
Sales13.04%8.12%7.40%7.14%9.41%10.05%11.06%10.11%8.87
%8.58%9.08%Shake ShackDEC '18DEC '17DEC '16DEC
'15DEC '14DEC '13DEC '12 Cash and cash
equivalents2521.511.670.82.713.157.0Total
revenue459358.8268.5190.6118.582.557.0Company operated
stores and IPO 2015 - see cash go up a lot Capital
expenditures8861.5354.4332.1228.5216.1911.04Cash as % of
Sales5.39%5.99%4.32%37.17%2.26%15.86%NMCapital
expenditure as a % of
Sales19.05%17.15%20.27%16.85%24.06%19.64%19.35%Dunki
n BrandsDEC '18DEC '17DEC '16DEC '15DEC '14DEC '13DEC
'12 Cash and cash
equivalents5181018.3361.40260.40208.10256.90252.60Total
revenue1,322860.5828.9810.9748.7713.8658.0 Capital
expenditures51.914.615.1730.2523.6431.122.4Cash as % of
Sales39.16%118.34%43.60%32.11%27.79%35.99%38.39%Capit
al expenditure as a % of
Sales3.93%1.70%1.83%3.73%3.16%4.36%3.40%Whitbread
(Costa Coffee)DEC '18DEC '17DEC '16DEC '15DEC '14DEC
'13 Cash and cash equivalents916357.102.1041.4040.00Total
revenue3,2953,106.02,921.82,608.12,294.32,030.0 Capital
expenditures467571.2680.3518.5286.3329Cash as % of
Sales2.75%2.03%1.95%0.08%1.80%1.97%Capital expenditure
as a % of Sales14.17%18.39%23.28%19.88%12.48%16.21%
Spread & ValuationStarbucks CorporationStarbucks
CorporationSBUX 855244109 2842255 NASDAQ
Common stock SBUXSource: FactSet FundamentalsSource:
FactSet FundamentalsSEP '18SEP '17SEP '16SEP '15SEP
'14SEP '13SEP '12SEP '11SEP '10SEP '09DEC '18DEC '17DEC
'16DEC '15DEC '14DEC '13DEC '12DEC '11DEC '10DEC
'09364 Days364 Days371 Days364 Days364 Days364 Days364
Days364 Days371 Days364
DaysPrice/Sales3.143.633.774.603.653.922.932.902.251.83Price
/Sales3.213.513.784.583.493.962.952.451.851.51Price/Earnings
28.1718.9528.4737.0924.80584.6028.3027.5523.4531.55Price/E
arnings17.5427.2628.4931.8627.747,733.0028.3323.0220.9238.
13Price/Book Value-
14.0513.9614.9810.6312.167.637.265.945.27Price/Book
Value63.6214.1113.4414.8010.6913.007.446.335.244.84Price/T
angible Book Value-
97.2721.7122.9816.8915.868.538.016.475.85Price/Tangible
Book Value-
22.1621.6723.1413.6017.438.327.035.765.42Price/Cash
Flow6.3718.2618.4122.9018.07137.1017.0425.1615.3012.33Pric
e/Cash
Flow6.6418.8017.5923.4194.3820.2722.4017.8011.6310.65Price
/Free Cash Flow7.5628.6927.0434.6627.73-
28.5041.6721.6116.54Price/Free Cash
Flow7.9629.5725.6835.89-33.5543.8426.5615.6815.68Dividend
Yield (%)2.081.831.531.131.341.131.371.221.120.00Dividend
Yield (%)2.221.861.481.101.381.091.341.390.890.00Enterprise
Value/EBIT20.0220.0120.6524.6619.4523.5319.7216.7612.4716
.15Enterprise
Value/EBIT19.4319.7920.7125.2220.0525.0520.0816.8412.9915
.30Enterprise
Value/EBITDA14.6115.6916.2819.2815.3318.3114.9312.369.10
10.13Enterprise
Value/EBITDA14.5115.5816.3719.7615.8619.3715.2212.459.36
9.77Enterprise
Value/Sales2.973.443.714.323.343.652.672.161.651.54Enterpris
e Value/Sales3.033.493.784.453.453.762.752.251.691.56Total
Debt/Enterprise
Value0.120.060.040.030.040.040.020.020.030.04Total
Debt/Enterprise
Value0.130.050.050.030.040.020.020.020.030.04United States /
Restaurants -INDFI3435US Source: FactSet Market
AggregratesCorporate Spreads USD Spread to Treasury 27
Feb '19DEC '18DEC '17DEC '16DEC '15DEC '14DEC '13DEC
'12DEC '11DEC '10DEC '091 Month3 Months6 Months1 Year2
Years3 Years5 Years7 Years10 Years20 Years30
YearsPrice/Earnings21.8226.3323.1426.9422.9323.1018.9720.9
018.5817.21Consumer Non-DurablesPrice/Earnings (excl
negatives)21.7125.9922.9726.6822.6022.9218.8920.7018.4616.2
1AAA-----------
Price/Sales2.692.792.322.552.542.592.102.291.911.49AA18.911
8.9118.9118.1219.8925.1440.3853.0171.481.6175.311Price/Boo
k Value-
152.8747.5020.3410.497.847.636.306.825.634.61A22.1317.611
5.2322.3134.6429.3267.5564.71115.71162.3895.795Price/Cash
Flow12.3519.9914.5416.0418.0415.5513.3313.6312.299.83BBB
5.7829.646.8855.2171.92102.86131.69154.08172.15271.49277.
49Price/Cash Flow (excl
negatives)12.3519.9914.5316.0218.0415.5513.3313.6312.279.82
BB110.75110.75110.75110.75204.293209.43214.47241.25268.1
35268.135268.135Price/Free Cash
Flow17.9934.6323.9927.2538.8329.9225.4422.5819.2717.14B21
0.868210.868210.868210.868210.868210.868210.868210.86821
0.868210.868210.868Enterprise
Value/EBIT19.4219.7217.8518.7716.8616.9814.0215.0913.3912
.25Consumer ServicesEnterprise
Value/EBITDA14.9415.2813.4414.1812.9213.1410.9311.6910.2
39.12AAA102.729102.729102.729102.729102.729102.729102.7
29102.729102.72991.577.84Enterprise
Value/Sales3.173.242.702.852.782.832.352.512.131.76AA106.9
51106.951106.951106.951106.951106.951106.951106.951106.9
51106.951106.951A72.5949.9327.2726.53727.6438.9976.2189.5
6112.01156.24140.84United States / Beverages: Non-Alcoholic
-
INDBBB244.48137.5743.6656.6564.9191.41121.32139.86167.7
3194.19194.741FI2420US
BB97.4660.6652.3395.69126.54173.27175.82226.17219.15309.
28274.318Source: FactSet Market
AggregratesB200.853200.853200.853183.6256.1368.57478.174
71.35323.734362.103362.103DEC '18DEC '17DEC '16DEC
'15DEC '14DEC '13DEC '12DEC '11DEC '10DEC '09Retail
TradePrice/Earnings33.6726.0921.7023.6020.7419.5016.8316.2
117.2817.45AAA-----------Price/Earnings (excl
negatives)33.5626.0321.7023.5920.7419.5016.8316.2117.2517.4
5AA9.6489.6489.64810.3514.8627.0141.5361.7682.36119.6384.
173Price/Sales3.543.513.123.092.822.612.262.252.502.15A16.0
6416.06415.7417.6619.6222.4243.9260.2680.24126.98107.48Pri
ce/Book
Value7.068.937.508.275.965.724.874.555.095.48BBB1227.4963
1.937.0243.6871.475.07125.99141.33205.78226.32218.026Price
/Cash
Flow22.4020.5517.5816.3716.1515.1614.4914.0813.7213.25BB
129.722129.722129.722129.722166.36203.011260.578260.5785
07.616477.99448.367Price/Cash Flow (excl
negatives)22.3820.5417.5816.3716.1515.1614.4914.0813.7113.2
5B648.92648.92393.65147.74157.11403.489403.489403.489580
.519580.519580.519Price/Free Cash
Flow30.9327.9824.3621.6521.8520.4221.1121.4118.6319.45Ent
erprise
Value/EBIT21.0921.2018.9219.0117.0116.1314.2014.0914.2713
.68Enterprise
Value/EBITDA17.7017.6615.6115.6513.9813.2311.6011.5311.9
311.10Enterprise
Value/Sales4.103.933.533.473.152.932.582.572.712.37Or put
together your own relevant peer analysis
Store countsStarbucks Coffee Company - Store Counts by
MarketYou can get additional data through Q1 2019(Updated
through the period ending September 30,
2018)Licensed201820172016201520142013Q3 FY13Q2
FY13Q1 FY13Q4 FY12Q3 FY12Q2 FY12Q1 FY12Q4 FY11 Q3
FY11 Q2 FY11Q1 FY11Q4 FY10Q3 FY10Q2 FY10Q1
FY10AmericasArgentina14312410590766866646461545150393
3323024201514Aruba443333333333332222111Bahamas121210
999888899999998888Bolivia4443- 0--------Brazil118- 0- 0- 0-
0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0-
0Canada4093773643494623973553253023002912922912812752
73274273271267265Chile1191059379625044434241403736353
1313130303030Colombia312111102----------------Costa
Rica14121174322211----------Curacao3322222111111--------El
Salvador121110105544444443222----
Guatemala9775422222222211-----Jamaica6- 0- 0- 0- 0- 0- 0- 0-
0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0-
0Mexico708632563506434403384377368356349342338318314
304296283273268266Panama9651- 0--------
3634323029272727Peru102918477746558565445444341363432
3029272727Puerto Rico26242319- 0--------
3634323029272727Trinidad and Tobago751- 0- 0- 0- 0- 0- 0- 0-
0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0United
States6,0315,7085,2924,9624,6594,4084,3114,2584,2224,1894,1
074,0834,0414,0053,9423,9063,9013,8673,8473,8373,861Urugu
ay3- 0- 0- 0The
Americas7,7707,1466,5886,1325,7965,4155,2395,1435,0725,01
14,9054,8674,8164,7314,6434,5924,5754,5164,4774,4534,472R
ate of
Growth8.73%8.47%7.44%5.80%7.04%CAPAustralia423122252
424242424232222222122222222222222Brunei44432-------------
---Cambodia1472- 0- 0----------------China-
01,3961,110785544403364345325292264247239218207198194
186178177172Hong
Kong/Macau193180169157147136136135135131126122122117
116112111111112112112India1281008477542416113--------
Indonesia365317260214186161154147139133127122117109102
969085807576Japan1068672581,0601,000988985975965966955
950935925914901892886878876Malaysia268248226199175150
142141140134130125123121121119116117115116117New
Zealand222325262628293030343435353535373839394141Phili
ppines36032429326424021621220520720119519018818318117
6175168162163162Singapore141134- 0- 0- 0- 0- 0- 0- 0- 0- 0-
0- 0- 0- 0- 0- 0- 0- 0- 0- 0South
Korea1,2311,108952831700559526501472467442415391367347
330323315299295295Taiwan45842039235632329729028628027
1271264255249240239232228229225226Vietnam393121151121
1-------------Total
CAP3,3714,4093,6323,0103,4923,0002,8822,8112,7302,6512,57
72,4972,4422,3552,2962,2432,2022,1632,1222,1042,099Rate of
Growth-23.54%21.39%20.66%-
13.80%16.40%EMEAAndorra111- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0----
----Austria2111- 0- 0- 0- 0- 0- 0- 0- 0- 0--------Azerbaijan4441-
0- 0- 0- 0- 0- 0- 0- 0- 0--------
Bahrain292320181715151514131312111111111111111010Belgi
um2521181514101099966655444443Bulgaria126555444444444
4444433Cyprus111010999999999999999999Czech
Republic373026231817151514141313121212121211101010Den
mark20212119158444333333222222Egypt363234302525252423
232121212222222222222222Finland88843222211----------
France10070502723181413131184333332222Germany15215616
11074333111111111111Greece312929313134343434424646525
959606060606868Hungary22171411998777766533311--
Ireland777871534029292927272825242324222222232323Jorda
n232116121011111199999999999910Kazakhstan16136- 0- 0- 0-
0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0-
0Kuwait14211895777269696766656767676768676866676563Le
banon393629272017171515161616161615141414141417Luxem
bourg332- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0-
0Monaco22211----------------Morocco111087644433332--------
Netherlands6557484541292825252320191614111088776Norwa
y24231716115211111---------
Oman1312121066666666666777777Poland69594743383433333
2292823211611997533Portugal1811111088777777777776655Q
atar343016161311131212121111101010101010999Romania413
12219108888888888888887Russia125115107104876563636460
5656535250474337353129Saudi
Arabia16612492716762686565646363636565676969696968Slo
vakia432- 0- 0----------------South Africa1263- 0- 0---------------
-
Spain14211396898682827979787675757574767675757674Swed
en151618116554333311111111-
Switzerland753551111111111111111Turkey4533873142602201
93190181176171169162159153147141138137132129127United
Kingdom653606532414285242223211201195183172166162156
1461381351068783UAE -
Dubai186164148131115107107106105999798989495959795959
493Total
EMEA2,8302,4722,1191,6251,3231,1431,1091,0671,0411,01498
4950930913890868856834795769755Rate of
Growth14.48%16.66%30.40%22.83%15.75%Co-
operated201820172016201520142013Q3 FY13Q2 FY13Q1
FY13Q4 FY12Q3 FY12Q2 FY12Q1 FY12Q4 FY11 Q3 FY11 Q2
FY11Q1 FY11Q4 FY10Q3 FY10Q2 FY10Q1
FY10AmericasBrazil-
01081041038970595554534538322826242423232424Canada1,1
091,0831,0351,0099839409138988868748628448388308128078
03799790787785Puerto Rico- 0- 0- 0-
02019191919191919191919212121212121United
States8,5758,2227,8807,5597,3037,0496,9236,8806,8696,8566,7
266,7056,6966,6976,6836,6916,6986,6996,7196,7286,760Total
The
Americas9,6849,4139,0198,6718,3958,0787,9147,8527,8287,80
27,6527,6067,5857,5747,5407,5437,5467,5427,5537,5607,590U
S Rate of
Growth4.29%4.34%4.25%3.51%3.60%CAPChina3,5211,5401,2
721,0268236145465044424083553303052782602472372202051
99193Japan1,2861,2181,1401,073- 0--------Singapore- 0-
012611610694888684807977767270696664656564Thailand352
31227323720317416916516315515114614414113913913713313
4133132Total
CAP5,1593,0702,8112,4521,13288280375568964358555352549
1469455440417404397389China Rate of
Growth128.64%21.07%23.98%24.67%34.04%EMEAAustria171
717181716141312121212121212111110101011France70737476
7872706969676664636259565454525151Germany- 0- 0-
01491521571611601591571531531541501491431441421391401
44Switzerland56575656555252515050494949464545464646464
6Netherlands1210101097433333221------United
Kingdom335345366428506522531535542566569569573573574
571574568573577588Total
EMEA49050252373781782683283183585585285085384584082
6829820820824840EMEA Rate of Growth-2.39%-4.02%-
29.04%-9.79%-1.09%Regional
Totals201820172016201520142013 Americas Licensed
7,7707,1466,5886,1325,7965,4155,2395,1435,0725,0114,9054,8
674,8164,7314,6434,5924,5754,5164,4774,4534,472 Americas
Co-operated
9,6849,4139,0198,6718,3958,0787,9147,8527,8287,8027,6527,6
067,5857,5747,5407,5437,5467,5427,5537,5607,590 (U.S.
Subtotal)14,60613,93013,17212,52111,96211,45711,23411,1381
1,09111,04510,83310,78810,73710,70210,62510,59710,59910,5
6610,56610,56510,621Total
Americas17,45416,55915,60714,80314,19113,49313,15312,995
12,90012,81312,55712,47312,40112,30512,18312,13512,12112,
05812,03012,01312,062 CAP
Licensed3,3714,4093,6323,0103,4923,0002,8822,8112,7302,651
2,5772,4972,4422,3552,2962,2432,2022,1632,1222,1042,099
CAP Co-
operated5,1593,0702,8112,4521,13288280375568964358555352
5491469455440417404397389 (Mainland China
Subtotal)3,5212,9362,3821,8111,3671,017910849767700619577
544496467445431406383376365Total
CAP8,5307,4796,4435,4624,6243,8823,6853,5663,4193,2943,16
23,0502,9672,8462,7652,6982,6422,5802,5262,5012,488
EMEA
Licensed2,8302,4722,1191,6251,3231,1431,1091,0671,0411,014
984950930913890868856834795769755 EMEA Co-
operated4905025237378178268328318358558528508538458408
26829820820824840 (ME
Subtotal)643538436369326302310301295287285285282278279
280285281281277277Total
EMEA3,3202,9742,6422,3622,1401,9691,9411,8981,8761,8691,
8361,8001,7831,7581,7301,6941,6851,6541,6151,5931,595All
Other Segments 201820172016201520142013
Licensed123735414266808666768281808032732655255855854
9552 Co-
operated8290358375369357350323171414161314131098889Tot
al All Other
Segments203273934164114234304098390969793943403365615
66566557561 Total
Licensed13,98314,06412,37410,80810,6539,6249,3109,1078,90
98,7528,5488,3958,2688,0798,1568,0298,1858,0717,9527,8757,
878 Total Co-
operated15,34113,27512,71112,23510,71310,1439,8999,7619,36
99,3149,1039,0258,9768,9248,8628,8348,8248,7878,7858,7898,
828Grand
Total29,32427,33925,08523,04321,36619,76719,20918,86818,2
7818,06617,65117,42017,24417,00317,01816,86317,00916,8581
6,73716,66416,706Licensed Rate of Growth-
0.58%13.66%14.49%1.45%10.69%Company Oper Rate of
Growth15.56%4.44%3.89%14.21%5.62%4 Restated for Austria
& Switzerland acquisitionsNote:8 Restated for licensing
ChileHistorical store counts have been recast for any ownership
or segment reporting changes made prior to Q1 FY15. Effective
in Q1 FY15, we changed our store count policy such that we
will no longer recast historical store counts upon a change in
ownership. These transfers will be reflected as current period
activity within "net stores opened/(closed) or transferred"
during the period.(1) Q1 FY18 reflects the transfer of 112
Brazil stores from company-operated to licensed.(2) Q1 FY18
reflects the transfer of 1,477 China stores from licensed to
company-operated as a result of the acquisition of East China
JV on 12/31/2017.(3) Q4 FY17 reflects the transfer of all
Singapore stores from company-operated to licensed.(4) Q3
FY16 reflects the transfer of all Germany stores from company-
operated to licensed.(5) Q4 FY15 reflects the transfer of all
Puerto Rico stores from company-operated to licensed.(6) Q1
FY15 reflects the transfer of 1,009 Japan stores from licensed to
company-operated as a result of the acquisition of Starbucks
Japan in the first quarter of fiscal 2015.(7) Includes Bahrain,
Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia,
UAE - Dubai
(6)
(6)
(2, 3, 6)
(2, 3, 6)
(7)
(5)
(5)
(1, 5)
(4)
(4)
(3)
(3)
(4)
(4)
(2)
(2)
(1)
(1)
Comp SalesStarbucks Coffee CompanyHistorical Comparable
Store Sales(Updated through the period ending December 30,
2018)ConsolidatedFY 01FY 02FY 03FY 04FY 05FY 06FY
07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY 15FY 16FY
17FY 18FY 19Q-1Total10%2%9%10%10%7%6%1%-
9%4%7%9%6%5%5%8%3%2%4%Transaction4%4%9%9%6%6
%4%-1%-5%1%5%7%4%4%2%4%-1%0%0%Ticket6%-
2%0%1%4%1%2%2%-4%4%2%2%2%1%3%4%4%2%3%Q-
2Total6%7%7%12%7%10%4%-3%-
8%7%7%7%6%6%7%6%3%2%Transaction1%7%6%11%4%8%1
%-4%-5%3%6%6%4%3%3%2%-1%-
1%Ticket5%0%1%1%3%2%3%1%-
3%4%1%1%2%3%4%4%4%3%Q-
3Total3%8%8%11%7%6%4%-4%-
5%9%8%6%8%6%7%4%4%1%Transaction1%8%7%10%3%4%1
%-4%-4%6%6%5%7%2%4%0%0%-
2%Ticket2%0%1%1%4%2%3%0%-
2%3%2%2%1%4%3%4%4%3%Q-4Total2%8%9%9%8%5%4%-
7%-
1%8%9%6%7%5%8%4%2%3%Transaction1%8%8%8%4%4%0
%-4%-1%5%6%5%5%1%4%-1%1%-
1%Ticket1%0%1%1%4%1%4%-
3%0%2%3%1%2%4%4%5%2%4%FYTotal5%6%8%10%8%7%5
%-3%-
6%7%8%7%7%6%7%5%3%2%Transaction2%7%7%9%4%5%1
%-4%-4%4%6%6%5%3%3%1%0%-1%Ticket3%-
1%1%1%4%2%4%0%-
2%3%2%1%2%3%4%4%3%3%AmericasFY 01FY 02FY 03FY
04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY
14FY 15FY 16FY 17FY 18FY 19Q-1Total-
10%4%7%9%7%5%5%9%3%2%4%Transaction-
5%0%5%7%4%4%2%4%-2%0%0%Ticket-
4%4%2%2%2%1%3%5%5%2%4%Q-2Total-
8%7%6%8%6%6%7%7%3%2%Transaction-
5%3%5%7%5%2%2%3%-1%0%Ticket-
3%4%1%1%2%3%5%5%4%3%Q-3Total-
6%9%8%7%9%6%8%4%5%1%Transaction-
4%6%5%5%7%2%4%0%0%-2%Ticket-
2%3%2%2%2%4%4%4%5%4%Q-4Total-
1%7%10%7%8%5%8%5%3%4%Transaction-
1%5%6%5%5%1%4%-1%1%-
1%Ticket0%2%3%2%3%4%5%6%2%5%FYTotal-
6%7%8%8%7%6%7%6%3%2%Transaction-
4%3%5%6%5%2%3%1%0%-1%Ticket-
2%3%2%2%2%3%4%5%4%3%U.S. FY 01FY 02FY 03FY 04FY
05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY
15FY 16FY 17FY 18FY 19Q-1Total11%11%7%6%-1%-
10%4%8%9%7%5%5%9%3%2%4%Transaction6%6%3%-3%-
6%0%6%7%4%4%2%4%-2%0%0%Ticket5%1%3%2%-
5%4%2%1%2%1%4%5%5%2%4%Q-2Total13%7%10%3%-4%-
8%7%7%8%7%6%7%7%3%2%Transaction12%4%8%0%-5%-
5%3%6%7%5%2%2%3%-2%0%Ticket1%3%2%3%1%-
3%5%1%1%2%3%5%5%4%3%Q-3Total12%7%6%4%-5%-
6%9%8%7%9%7%8%4%5%1%Transaction11%3%5%0%-4%-
4%6%6%5%7%2%4%0%0%-3%Ticket1%4%1%4%-1%-
2%3%2%2%2%5%4%4%5%4%Q-4Total9%9%5%4%-8%-
1%8%10%7%8%5%9%4%2%4%Transaction8%4%4%-1%-5%-
1%6%7%5%5%1%4%-1%0%-1%Ticket1%5%1%5%-
3%0%2%3%2%3%4%5%6%2%5%FYTotal5%7%9%11%9%7%4
%-5%-
6%7%8%8%8%6%7%6%3%2%Transaction10%4%5%0%-4%-
4%3%6%6%5%2%3%1%-1%-1%Ticket1%5%2%4%0%-
2%4%2%2%2%3%4%5%4%3%CAPFY 01FY 02FY 03FY 04FY
05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY
15FY 16FY 17FY 18FY 19Q-
1Total2%6%19%20%11%8%8%5%5%1%3%Transaction-
1%6%18%15%8%7%8%4%2%1%1%Ticket3%0%1%5%3%1%0
%2%3%0%2%Q-
2Total1%12%18%18%8%7%12%3%3%3%Transaction-
1%10%17%14%4%7%10%2%1%0%Ticket3%2%1%4%3%0%2
%2%1%3%Q-3Total3%11%26%12%9%7%11%3%1%-
1%Transaction1%8%24%8%8%6%10%2%0%-
3%Ticket2%2%2%4%0%1%1%1%1%2%Q-
4Total3%17%25%10%8%5%6%1%2%1%Transaction2%12%21
%7%6%6%6%0%1%-1%Ticket1%4%3%2%2%-
1%0%2%1%2%FYTotal2%11%22%15%9%7%9%3%3%1%Tran
saction0%9%20%11%7%6%8%1%1%-
1%Ticket2%2%2%3%2%0%1%2%1%2%EMEAFY 01FY 02FY
03FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY
13FY 14FY 15FY 16FY 17FY 18FY 19Q-1Total-5%3%3%2%-
1%5%4%1%-1%-1%-1%Transaction-4%6%2%2%2%3%3%1%-
2%-4%-1%Ticket-1%-2%2%1%-3%1%1%0%1%3%0%Q-2Total-
4%4%4%-1%-2%6%2%1%-1%-1%Transaction-1%6%5%0%-
1%5%2%0%0%-4%Ticket-3%-2%-1%0%0%1%1%1%-1%3%Q-
3Total-2%5%3%0%2%3%3%-
1%2%0%Transaction1%5%3%0%5%2%2%0%0%-2%Ticket-
3%0%1%0%-3%2%1%-2%2%3%Q-4Total0%7%1%-
1%2%5%5%-1%1%2%Transaction4%5%2%0%3%2%3%0%-
2%0%Ticket-4%2%-1%-1%-1%2%3%-1%3%2%FYTotal-
3%5%3%0%0%5%4%0%1%0%Transaction0%6%3%0%2%3%2
%1%-1%-3%Ticket-3%-1%0%0%-2%2%1%0%1%3%NOTE:
Includes only Starbucks company-operated stores open 13
months or longer. Comparable store sales exclude the effect of
fluctuations in foreign currency exchange rates.
HW RatiosStarbucks (SBUX)Tax
rate21.83%WACC7.50%Download any other relevant data from
Starbucks or its competition% ofData from Dunkin Donuts is
given in the DNKN tabFiscal Year &
TTM201320142015201620172018TTMTotalSales14,866.816,44
7.819,162.721,315.922,386.824,719.525,278.420182017201620
152014Company11,793.212,977.915,197.316,844.117,650.719,6
90.320,318.880.4%Beverages74%73%74%73%73%Licensed1,36
0.51,588.61,861.92,154.22,355.02,652.22,706.910.7%Food20%
20%19%19%19%CPG &
Other1,713.11,881.32,103.52,317.62,381.12,377.02,252.78.9%P
ackaged2%3%3%3%3%Other4%4%4%5%5%EBIT-
325.43,081.13,601.04,171.94,134.73,883.33,783.0Total100%10
0%100%100%100%NOPLAT GAAP-
254.42,408.42,814.83,261.03,231.93,035.42,957.0Adjustments
to EBIT-2,784.120.20.00.0-153.5-224.4-240.0% of Total
Sales20182017201620152014NOPLAT non-
GAAP1,921.92,392.62,814.83,261.03,351.93,210.83,144.6Total
100.0100.0100.0100.0100.0Net
Income8.32,068.12,757.42,817.72,884.74,518.33,028.8Americas
68.271.471.271.375.1China/Asia
Pacific18.214.814.112.97.1Cash3,233.81,843.81,611.42,263.22,
690.98,937.8Channel Development9.49.29.39.39.7Total
Equity4,482.35,273.75,819.85,890.75,457.01,175.8EMEA4.34.6
5.46.58.1Total
Debt1,299.42,048.32,391.43,642.93,987.69,493.7Total
Assets11,516.710,752.912,416.314,312.514,365.624,156.4Unite
d
States70.473.874.073.776.5China/Japan/UK22.120.220.020.0Inv
ested Capital
5,781.77,322.08,211.29,533.69,444.610,669.5Other7.56.06.06.3
Fiscal Year & TTM201320142015201620172018TTMGrowth in
Sales20182017201620152014Capital Expenditure-1,151.2-
1,160.9-1,303.7-1,440.3-1,519.4-
1,976.4Total12.05.411.616.810.0Acquisition-610.40.0-
284.30.00.0-1,311.3Americas6.95.811.311.08.9Noncash
expenses655.6748.4933.81,030.11,067.11,305.9China/Asia
Pacific38.110.322.7112.123.2Change in NWC734.8-
2,209.8278.8353.089.76,913.7Channel
Development14.43.911.612.08.8Net Investment239.2-2,622.3-
91.1-57.2-362.66,243.2EMEA3.4-9.9-7.5-6.011.6Net Investment
w/acquisition-371.2-2,622.3-375.4-57.2-362.64,931.9United
States4.811.712.210.3FCF w/o acquisition-15.2-
213.92,723.73,203.82,869.39,278.6China/Japan/UK5.711.4FCF
w/acquisition-625.6-
213.92,439.43,203.82,869.37,967.3Other5.85.4-68.610.9FCF
non-GAAP2,161.1-229.72,723.73,203.82,989.39,454.0Operating
Margin20182017201620152014Fiscal Year
End201320142015201620172018Total22.2824.8125.6524.3924.
19Stock Price
(Data)$38.5$37.73$56.84$54.14$53.71$56.84Americas21.6023.
4025.2924.2523.45Dividend per share
(data)$0.42$0.52$0.64$0.80$1.00$1.26Channel
Development40.3644.4841.7737.7836.04Shares
(Basic)1,498.51,506.31,495.91,471.61,449.51,382.7China/Asia
Pacific19.3923.6121.4920.8932.98Shares
(Diluted)1,524.51,526.31,513.41,486.71,461.51,394.6EMEA5.8
711.4513.4813.829.21Market
capitalization$57,677.27$56,832.70$85,026.96$79,672.42$77,8
52.65$78,592.67Enterprise
Value$55,745.0$57,038.9$85,808.8$81,058.8$79,156.2$79,154.
9Q1 2019 operating marginTotal15.30%down 310 bp - non
GAAP 17.4%P/E
ratio6949.1x27.5x30.8x28.3x27.0x17.4xAmericas22.00%EV/
EBITDA168.8x14.9x18.9x15.6x15.2x15.3xChannel
Development34.80%EV/EBITDA non-
GAAP17.9x15.0x18.9x15.6x14.8x14.6xChina/Asia
Pacific18.00%EMEA10.10%Calendar Year
End201320142015201620172018YTDStock Price
(Data)$39.20$41.03$60.03$55.52$57.43$64.40$67.09Same store
sales by geographyShares
(Data)1513.001,498.81,485.91,457.51,421.01,240.6$1,240.60A
mericas 4% increase all due to priceMarket
capitalization$59,309.6$61,495.8$89,198.6$80,920.4$81,608.0$
79,894.6$83,231.9CAP 3% increase with 2% due to price and
1% transactions - China same store up 1% with transactions
down 2%EMEA down 1% due to 1% decline in
transactionsChannel Development revenue down 20% and
margins down to 34.8%Fiscal
Year20142015201620172018TTMAverageIndustryROIC
w/goodwill36.8%36.2%36.8%34.1%30.2%34.8%20.9%ROIC
w/o goodwill42.0%43.0%45.1%42.6%42.7%43.1%ROIC non-
GAAP36.5%36.2%36.8%35.3%31.9%35.4%average only fiscal
yearsROE42.4%49.7%48.1%50.8%136.2%65.5%-
700.6%ROA18.6%23.8%21.1%20.1%23.5%21.4%13.2%Gross
Margin58.3%59.4%60.1%59.6%58.8%58.7%59.2%24.6%Operat
ing Margin
GAAP18.7%18.8%19.6%18.5%15.7%15.0%18.3%16.3%Operati
ng Margin non-
GAAP18.6%18.8%19.6%19.2%16.6%15.9%18.5%Net
Margin12.6%14.4%13.2%12.9%18.3%12.0%14.3%12.3%Curren
t Ratio1.371.091.051.252.201.39Quick
Ratio1.010.730.740.931.951.07Debt/Equity0.390.410.620.738.0
72.04-3487.83Interest
Coverage48.0751.0851.3144.7022.8043.597.02Debt/
EBITDA0.530.490.580.731.300.732.89Economic Profit Spread
($)$1,917.0$2,232.3$2,595.6$2,520.3$2,281.1Economic Profit
Charge ($)$1,917.0$2,232.3$2,595.6$2,520.3$2,281.1As a % of
Sales20142015201620172018TTMAverageCapEx7.1%6.8%6.8%
6.8%8.0%7.1%Acquisition0.0%1.5%0.0%0.0%5.3%1.4%averag
e only fiscal years%
Change20142015201620172018TTMAverageCAGRRevenue
10.6%16.5%11.2%5.0%10.4%2.3%10.8%10.7%Company10.0%1
7.1%10.8%4.8%11.6%3.2%10.9%10.8%Licensed16.8%17.2%15
.7%9.3%12.6%2.1%14.3%14.3%CPG9.8%11.8%10.2%2.7%-
0.2%-5.2%6.9%6.8%Same Store Sales
(data)6.0%7.0%5.0%3.0%2.0%4.0%4.6%Domestic Same Store
Sales (data)6.0%7.0%6.0%3.0%2.0%4.0%4.8%Operating
Income GAAP846.9%16.9%15.9%-0.9%-6.1%-
2.6%174.5%264.2%average only fiscal yearsOperating Income
non-GAAP24.5%17.6%15.9%2.8%-4.2%-2.1%11.3%10.8%Net
Income24816.9%33.3%2.2%2.4%56.6%-
33.0%4982.3%252.5%FCF1311.8%-1373.2%17.6%-
10.4%223.4%33.8%260.9%FCF w/ acquisition65.8%-
1240.3%31.3%-10.4%177.7%-195.2%66.3%Capex
0.8%12.3%10.5%5.5%30.1%11.8%Economic
Profit16.4%16.3%-2.9%-9.5%5.1%Fiscal Year %
Change20142015201620172018AverageCAGRStock Price-
1.97%50.65%-4.75%-0.79%5.83%9.79%8.11%Total Return-
0.62%52.35%-3.34%1.05%8.17%11.52%9.85%Calendar Year %
Change20142015201620172018YTDAverageCAGRStock
Price4.7%46.3%-7.5%3.4%12.1%4.2%11.81%10.44%Total
Return (data)6.2%48.2%-6.1%5.4%14.8%14.8%13.69%Industry
(data)5.7%15.4%-0.3%19.8%4.94%5.38%9.11%average only
calendar yearsS&P 500 Price (data & calc)11.4%-
0.8%9.5%19.4%-6.26%2.08%6.65%6.28%Moody's
S&PFitchCurrent Credit Rating
(Data)Baa1BBB+BBB+Downgraded in 2016,17,18 by each
agency** Everything must be calculated or carried over from
financial statements UNLESS specifically noted by the term
"data"S&P 50020131848.3620182506.85
The downgrade reflects Starbucks' aggressive change in
financial policy, the third material revision within the past year,
with an increased commitment to return $25 billion of cash to
shareholders via dividends and share repurchases over the three
year period ending fiscal 2020 (September), up from $9 billion
returned during the previous three years. Fitch anticipates total
debt could increase by almost $10 billion by fiscal 2020 to help
finance Starbucks' cash return goal given Fitch's projection of
FCF before dividends of more than $8 billion over that period
and roughly $5 billion of after-tax proceeds from the Nestle
licensing agreement. At fiscal year-end 2017, Starbucks had
$3.9 billion of total debt. (FITCH)
The downgrade was prompted by Starbucks decision to
materially increase debt to support returns to shareholders.
Shareholder returns are now targeted at $25 billion -- up from
$15 billion in November 2017 -- over the three year period from
2018 through 2020. This change in policy will be partially
funded with additional debt and result in a deterioration in
credit metrics that are more representative of the revised
ratings.
"The material increase in Starbuck's fixed shareholder return
target will result in significantly higher debt levels and weaker
credit metrics at a time of operating challenges" stated Moody's
Senior Credit Officer Bill Fahy." We estimate that the
additional debt needed to fund the proposed shareholder returns
will result in leverage exceeding 2.8 times and retained cash
flow to total debt of around 20%. "In addition, we remain
concerned that Starbucks willingness to curtail shareholder
returns in the event operating results fall short of expectations
remains uncertain and could lead to a further deterioration in
credit metrics," added Fahy. (MOODYS)
GraphsCalendar Year %
Change20142015201620172018YTDStock Price4.7%46.3%-
7.5%3.4%12.1%4.2%Industry5.7%15.4%-
0.3%19.8%4.94%5.38%S&P 50011.4%-0.8%9.5%19.4%-
6.26%2.08%Fiscal
Year20142015201620172018TTMROIC36.8%36.2%36.8%34.1
%30.2%30.0%Operating Margin
GAAP18.7%18.8%19.6%18.5%15.7%15.0%Operating Margin
non-GAAP18.6%18.8%19.6%19.2%16.6%15.9%FCF1311.8%-
1373.2%17.6%-10.4%223.4%Revenue
10.6%16.5%11.2%5.0%10.4%2.3%201320142015201620172018
TTMNOPLAT-
254.42,408.42,814.83,261.03,231.93,035.42,957.0Invested
Capital
5,781.77,322.08,211.29,533.69,444.610,669.512,056.520132014
2015201620172018TTMSales14866.816447.819162.721315.922
386.824719.50097625278.399951NOPLAT-
254.35246704812408.37549545732814.7610136453261.011239
32953231.93345268483035.42452848072957.023294545120142
015201620172018YTDSales
growth10.6%16.5%11.2%5.0%10.4%2.3%Cost of
Sales7.5%13.5%9.3%6.2%12.6%2.6%Store operating
exp8.2%16.7%12.1%7.1%10.8%3.6%Other oper
exp5.9%14.2%4.4%1.5%-2.6%-1.3%General oper
exp5.7%20.7%13.7%2.4%26.2%2.2%Restructuring46.2%7.0%O
perating expense
growth7.5%15.2%10.5%7.0%12.8%2.8%Calendar Year %
Change20142015201620172018YTDStock Price4.7%46.3%-
7.5%3.4%12.1%4.2%Main Competitor-11.5%-
0.1%23.1%22.9%-0.5%7.4%20142015201620172018YTDSales
growth10.6%16.5%11.2%5.0%10.4%2.3%Cost of
Sales7.5%13.5%9.3%6.2%12.6%2.6%Store operating
exp8.2%16.7%12.1%7.1%10.8%3.6%Other oper
exp5.9%14.2%4.4%1.5%-2.6%-1.3%General oper
exp5.7%20.7%13.7%2.4%26.2%2.2%Restructuring46.2%7.0%O
perating expense growth7.5%15.2%10.5%7.0%12.8%2.8%Same
Store Sales (data)6.0%7.0%5.0%3.0%2.0%4.0%Operating
Margin GAAP18.7%18.8%19.6%18.5%15.7%15.0%
Correlation of NOPLAT & Invested Capital
NOPLAT 2013 2014 2015 2016 2017 2018 TTM -
254.35246704806849 2408.3754954572905
2814.7610136450312 3261.0112393295458
3231.9334526848406 3035.4245284806821
2957.0232945450653 Invested Capital 2013 2014
2015 2016 2017 2018 TTM 5781.7000000000007
7322.0000000000009 8211.2000000000007 9533.6
9444.5999999999985 10669.499843
12056.534822589998
Correlation of Sales & NOPLAT
Sales 2013 2014 2015 2016 2017 2018 TTM
14866.800000000001 16447.8 19162.7
21315.899999999998 22386.800000000003
24719.500976000003 25278.399950999999
NOPLAT 2013 2014 2015 2016 2017 2018 TTM -
254.35246704806849 2408.3754954572905
2814.7610136450312 3261.0112393295458
3231.9334526848406 3035.4245284806821
2957.0232945450653
All Screen Shots
Fin 332 – Take Home Project for Starbucks
The second assignment is a take home project. I will allow you
to work in groups of two if you choose. This is not required,
meaning you may work alone as well. Given this is a take
home, I expect you to work as if this were an in-class exam in
terms of copying and/or sharing of information. You are NOT
to work with others unless they are part of your 2-person team.
You will abide by Drexel’s honesty code. If for ANY reason, I
suspect sharing of information, all parties will receive a “0” on
the exam or possibly fail the class. You will be reported to the
Dean no questions asked. No project will be accepted unless
you sign off on these terms.
If you delete any rows, change how I want the calculations to be
constructed, change up the tabs, etc., you will lose ten points
per change you make. Unfortunately, I have had too much
experience with students copying in various different ways and
therefore need to be VERY STRICT on this. In addition, you
will be signing a full statement saying you have not in any way
shared or plagiarized information.
You have until Thursday, March 7th at 11:59 pm to complete
the exam. If I receive your work after the required time, you
will receive a “0” for your grade. Late assignments WILL NOT
be accepted. I am happy to give guidance on the project but
will not sit with you while you complete each part of the exam.
Office hours will be held Tuesday, March 5th from 2:30-5:00
pm and Thursday March 7th from 8:00 – 9:50 AM, 12 - 3:00
pm. All work must be shown in excel (NO COPY AND PASTE
VALUES unless part of forecasting) and all qualitative
questions must be answered in a word document. If you choose
to work in a group of two, only one excel file and one word
document should be sent, with the names of your group on the
email itself and the documents. Make sure you upload your
work to the BBLearn icon in the week 9 folder as well as upload
your word document to the turnitin icon in week 9. DO NOT
give any definitions in your qualitative analysis unless
specifically asked.
GOOD LUCK!
Our final objective is to take the information we analyzed in the
first homework assignment and attempt to value Starbucks
(SBUX) and determine if you should invest in the stock today
(3/7/19). Use the excel template provided to assess any
historical and forecasted data. Most of your quantitative
information will come from your calculations but if you have
downloaded anything, i.e. ERP, it must be sourced appropriately
(screen shots are typically sufficient and should be copied
directly into excel). Forecasts, if they come from research,
must also be sourced in footnotes and/or bibliography. Lack of
sourcing results in point deductions (including 10K).
Quantitative Analysis (70 pts)
1) Fill in all highlighted items on all tabs starting with the
historical data through the forecasted data (necessary items are
highlighted in yellow and extra comments in blue).
a. Historical Valuation & Forecast: I’d highly suggest starting
with the historical part of this tab and the WACC historical
values b/c they are based on actual data and do not require
opinions. All historical ratios must be calculated using the data
on the ROIC tab and all forecasted data should be hardcoded in
(unless you are using trend analysis or another process and
therefore should show your calculation in the appropriate cells).
i. Income/ Balance Sheet/ CF Statement:Given
ii. Historical & Forecast: This tab has both the whole Company
and some breakdown of revenues. You can calculate projected
sales growth either by segment, by transaction/price or by
license, company revenue & other. If you simply do
company/license/other, you must still have some overall
breakdown by geography. This tab (with the exception of row
68 down) should all be % and ratios as noted.
b. ROIC: Most values have been linked up to the Income
Statement, Balance Sheet and Cash Flow Statement. Some
things like the break-down of depreciation and amortization
should be input based on the 10K. You must convert your
forecast % to actual dollar values in this tab. Operating lease
data is also there. Nothing hard coded in meaning everything
must be linked back to the forecast tab.
c. Data Given on Several Tabs: There’s no calculations needed
on these tabs. It’s all historical information on SBUX,
Industry, Peers, etc.
d. WACC: Calculate the WACC based on market and book
values. Source appropriately for this tab. For all yellow
highlights, you should either calculate a value or link to data.
You may adjust things like the risk-free rate or beta according
to your predictions and/or the industry numbers given. It’s your
choice which WACC (meaning MV vs BV) to use in your DCF.
e. Operating Lease: You have a sample of this calculation on
the excel worksheet we used in the online class. Fill in
necessary data and calculations. Either create a separate DCF or
simply adjust the current DCF for operating leases as it is a
more conservative way to value. Assume current year PV, debt,
etc. applies both historically and forecasted for simplicity.
f. DCF: Calculate all yellow highlights or link data up to your
ROIC tab for values already calculated. Calculate a sensitivity
analysis for your exit multiple, growth rate and WACC. The
spread to EV/EBITDA, WACC, and growth should reflect the
historical volatility of these numbers and/or your view of things
going forward.
g. Fill in all remaining values on the excel template and
calculate your equity value. Based on this calculation, should
you buy, sell or hold WEN stock.
h. Extra credit: Create best, base and worst-case scenarios,
calculating the overall expected value. You’ll need three DCF’s
to complete this as extra credit only – it is not required. Once
you’ve completed your base case, simply make copies for the
other outcomes and then change your forecasts directly in the
DCF. You have to change multiple variables, explain your
changes and calculate an overall expected value to receive extra
credit.
Qualitative Assessment in a WORD document (30 pts)
1) Start your paper with a buy, sell or hold recommendation
stating the level of valuation as compared to the current market
price as of 3/7/19. Include both the current and forecasted
growth strategy of SBUX and how these plans have been
incorporated into your forecasts. This should incorporate both
domestic, international & franchise plans. (approximately 1
page)
a. You do NOT need to reiterate what you already wrote in your
homework assignment
b. How aggressive/conservative were you in your predictions
and how did this impact your overall decision.
2) OUTLINE FORMAT: Explain the inputs into your DCF
model. When I say “explain” I do not want a reiteration of the
number or the formula but rather what determined the number in
your analysis. You must support your thought process and
cannot just look at the history of the company and assume that
will continue. Bullet points should be used. Do not write up a
paper for this section.
a. Revenue growth, gross and operating profit margin
projections over the 2019-2023-time frame. Even if you read an
analyst report you still need to explain what is behind their
evaluation of SBUX growth. Did you include the economy in
your projections? Also include if your forecasts include things
like restructuring and impairment costs. Include your
assessment of segments, price, transaction, etc.
b. Terminal growth rate, ROIC and Exit multiple, you used in
the continuing value.
c. Invested capital projections – include your assessment of
NWC accounts (meaning what was behind your thoughts on how
you came up with your forecasted values), PP&E and intangible
assets.
d. WACC used and how you chose your inputs of Beta, Risk
free rate, Risk premium, MV or BV.
Based upon our forecasts for P&G, we have placed a HOLD
rating on the stock given its current trading levels. Using the
Exit Multiple, Key Driver, and FCF approaches we have
projected a stock price for P&G in the $82 to $83 range
indicating approximately a 5-6% drop in price from its current
closing price of $87.25.
The most recent Q3 earnings call for PG did not meet our
expectations. The company is still facing headwinds primarily
due to foreign currency and competition. Sales in Q3 were
slightly down (-1%) year-over-year, reflecting yet another
quarter of negative revenue growth as P&G is restructuring its
business to focus on key markets and sheds less profitable
product categories. The divesture of 41 beauty brands to Coty
Inc., which was completed in October 2016, negatively
impacted overall revenue growth by 2 percentage points.
However, the strongest negative contributor to revenue growth
in the quarter was the Grooming segment, which presented a 6%
drag on overall revenue growth due to unfavorable product mix
(-4%) and challenging pricing (-2%). A bright spot was the
Health Care segment, which contributed 4% to net sales growth,
driven by higher volumes. The results of Q3 are incorporated in
our TTM, which has been a large determinant of our estimated
sales growth for fiscal 2017.
As noted from PG’s CFO, a good year for PG is between 1-3%
all-in sales growth and a great year 3-5% all-in sales growth. In
terms of their current strategy, product innovation and repeat
customers are key for PG’s developed markets especially the
U.S. PG forecasted “organic sales growth for its U.S. market to
be about 2% for the first half of FY 2017”[footnoteRef:1].
Internationally, PG sees China as its biggest opportunity with
their growth drivers set on “premiumization of our brands,
digital execution, transforming our Go-To Market, and
dedicated category- customer organization”[footnoteRef:2]. [1:
PG CAGNY 2017 Presentation] [2: PG 2016 Analyst Day
Presentation]
In PG’s FY 2017 guidance, foreign currency is expected to be
“2-3% drag on the company’s all-in sales growth resulting in
their expectation for FY 2017 to be flat”[footnoteRef:3]. We
feel foreign currency is going to continue to be a headwind for
PG due to the outlook of rising U.S. interest rates driving the
strength of the USD. Internationally, China has become a
concern due to PG losing market share in the country “primarily
driven to the Baby Category”[footnoteRef:4]. Political unrest in
Brazil and Venezuela along with trouble in economies that are
dependent on oil make us feel international sales growth will
still be a challenge. Analyst research has reflected closer to 2-
3% growth per year based on the full restructuring succeeding &
emerging market pickup. We forecast PG can remain flat in ’17
and adjusted down our future estimates due to foreign currency
(as US interest rates are expected to continue to rise), softness
internationally in sales, and industry /population growth trends.
Our estimates are .40% in ‘17, 1.4% in ‘18, 1.9% in ‘19, 2.3%
in ‘20, 2.7% in ‘21. (see segment for more detail) [3: PG Q3
2017 Earnings Presentation] [4: PG Q3 2017 Earnings
Transcript]
Our sensitivity analysis most definitely had an impact on our
investment decision, particularly when looking at WACC vs
Growth. When WACC was above 6.5%, our decision would have
changed from “Hold” to “Sell” in all growth cases. When
WACC was 5.3% our decision would have changed from “Hold”
to “Buy” in all growth cases. As we see more upside risk in
WACC give current economic conditions, we stayed in the
“Hold” camp unless the EV/EBITDA multiple dropped below
12.70 then we would have placed a “Sell” rating on PG.
The EV/EBITDA multiple we chose was 13.2 implying a 2%
growth rate. In comparison to Colgate-Palmolive which our
speaker described as PG’s closest competitor, our 13.2 multiple
is more conservative than Colgate’s multiple of 15.98. We feel
13.2 is a realistic assumption due to PG’s 5-year average being
13.21 and 13.2 being slightly in the middle between its median
level EV/EBITDA multiple of 12.03 and it’s all time high of
14.28. This multiple also implied growth between 1.5-2%
terminal growth which is in line with our assumptions.
Outline Format:
A.
· Tax rate - We researched the historical tax rate and observed
slight increases from 22% in 2011 to 25% in 2016. We feel tax
reform by the Trump administration is ways away from
becoming legislation due to political gridlock; therefore, we
decided to keep the effective tax rate constant at 25% to keep
the forecasting consistent with future years.
· Sales Segment Growth- The sales segment growth was based
off our trailing twelve month assessments. We forecast growth
rates to remain the same in FY ‘17, for each segment to keep
results slightly above flat. For the future years, we see Fabric
generally increasing about a .5% to 1% due to increased market
penetration of fabric enhancers and beads. We see health care
continuing to excel at a nice pace with growth plateauing at
4.5% based in industry expectations. We see the bleeding in
Grooming stop in FY ‘20 and return to growth as the product
pipeline is strong, which is slightly pessimistic to analysts who
view Grooming returning to growth in FY ‘19. (Factset). We see
Beauty marginally increasing each year plateauing at 2% in FY
‘19 due to stabilization from brand divestitures as part of the
COTY deal. Beauty worldwide has been strong as evidenced by
the international sales in this segment. We also see pricing
power in this segment as the products remaining have stong
brand loyalty and units sold are strong. Finally, for Baby,
Feminine, & Family, we view this segment returning to growth
in FY ’18 and plateauing at 2.5% in FY ‘20; however, we are
nowhere near as optimistic as analysts “2.71% in FY ‘18” due to
concerns with China as we mentioned in the Baby Category.
· Gross Margin and Operating Margin - PG went through large
restructuring changes previously, but now that those changes
appear to be finished (we adjusted past years to see actual
margins wo these costs), we don’t predict more restructuring in
their future. We also didn’t assume impairments as well. All
other operating expenses we assumed in our forecasts.
However, PG has announced that they will be implementing a
new “$10 billion productivity and supply chain program from
2017 to 2021”[footnoteRef:5]. This new program is meant to
streamline supply networks across the United States and create
a more direct way to link PG to their customers. Because of this
and analyst research, we see gross margins and operating
margins increasing to 52.55% and 24.75% by FY ‘21. We aren’t
nearly as optimistic due to foreign currency concerns driving up
costs internationally and increased R&D spending incurred so
the company can continue to innovate to improve sales growth.
We forecast gross margins increasing .25%-.5% each year to
51.25% and Operating margins rising .2%-.5% to 24.2% by FY
‘21. We also see the higher margin healthcare and beauty
division driving some of this growth now that the product line
has been paired down. [5: PG 2016 Annual Report]
· Growth rate- We presumed a 2% long term growth rate for PG.
Historically the U.S. economy has been growing at about 2-
2.5% and we don’t see PG being able to outperform the U.S.
economy. Also, PG reported weakness internationally as we
mentioned earlier in our report; therefore, we are being
moderately conservative with a 2% terminal growth rate. This
also aligns with industry research as consumer staples will tend
to grow with GDP are not very volatile to economic trends.
· ROIC- Our terminal ROIC projection is 12.4%. We see
NOPLAT rising slightly $400M each year offset $3 billion of
increased capital needs; thus, causing ROIC to grind slowly up
to 12.4%. This estimation is slightly higher than the PG’s 6 year
average ROIC of 11.07%. still pretty conservative as the
restructuring is showing signs of success thus returning the
Company to higher ROI.
· EV/EBITDA multiple- Our estimation for this multiple was
13.2. We determined this was by looking at the average
EV/EBITDA ratios and its closest competitors. Terry from PG
mentioned Colgate- Palmolive as a close competitor with a
EV/EBITDA of 15.98; however, we feel this is too high because
PG’s multiple has never reached 15.98 historically. We chose
13.2 because it’s a more appropriate near PG’s 5-year average
of 13.21 and given the restructuring is almost complete, we feel
this is in line with the future growth of the firm.
· Operating Cash - For Operating cash as % of revenues we
chose 5% because it closest to the industry standard of cash as
percentage of revenues excluding PG. PG is a bit of an outlier
with their cash being historically about 8.95% on a 5-year
average.
· Goodwill - We projected to be flat for the foreseeable future
due to the fact their last major acquisition was Gillette in 2005.
· Capex- We estimated capital expenditures to stay
approximately 5%-6% of sales. Historically and as mentioned in
PG’s FY ‘17 presentation CAPEX is “expected between about
5%-5.5% of sales.”[footnoteRef:6] [6: PG Q3 2017 Earnings
Presentation]
· PP&E and NWC- We see PP&E ramping up from 31% in ‘17
to 35% in ‘21 as the firm continues to expand overseas. As the
restructuring is stated to end next year, NWC needs will
increase due to restructuring being over and the company
needed new equipment as well for growth and as part of their
planned supply chain overall.
· Intangible Assets- We estimate intangibles to incrementally
return to their historical average of 38.5% as NWC needs
increase due to restructuring ending.
· DSO-We estimate that our DSO ratio slightly increases in our
forecasting years returning to average levels of 27 days in 2021.
We attribute the prior years due to declining sales and divesting
brands equating to less accounts receivable.
· DIO- We forecast DIO increasing back to normal averages of
58 by 2021. We attribute the precipitous drop in inventory from
2014 to 2015 that stayed consistent in 2016 due to divesting
businesses. We see inventory picking back for our future
expected sales growth forecasts.
· DPO-Our DPO ratio shows our accounts payable decreasing
steadily to the 5-year average of 80 by 2021. FY 2016’s DPO of
100 days appears to be an outlier when looking at the
company’s historical operating cycle. DPO was 100 days just
once in 2016 out of the past 15 years of historical data. Much of
this was due to their restructuring efforts and with the Company
returning to more efficiency overall, this will improve DSO,
DIO and DPO
Sources:
http://www.snl.com/interactive/newlookandfeel/4004124/CAGN
Y2017Handout.pdf
http://www.pginvestor.com/Cache/1001223393.PDF?O=PDF&T
=&Y=&D=&FID=1001223393&iid=4004124
http://www.pginvestor.com/Cache/1001216941.PDF?O=PDF&T
=&Y=&D=&FID=1001216941&iid=4004124
https://seekingalpha.com/article/4065580-procter-and-gamble-
pg-q3-2017-results-earnings-call-transcript?page=1
http://www.pginvestor.com/Cache/1500090608.PDF?O=PDF&T
=&Y=&D=&FID=1500090608&iid=4004124

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SBUX ISIncome Statement - As Reported 10K in millionsIncome Statem.docx

  • 1. SBUX ISIncome Statement - As Reported 10K in millionsIncome Statement - As Reported 10Q in millions9/30/139/30/149/30/159/30/169/30/179/30/18TTM12/30 /173/30/186/30/189/30/1812/29/18TTM Company-operated stores$11,793.2$12,977.9$15,197.3$16,844.1$17,650.719,690.3 20,318.8 Company-operated stores4,741.84,828.05,060.45,060.1$5,370.3020,318.8 Total specialty$3,073.6$3,469.9$3,965.4$4,471.8$4,736.15,029.24,95 9.6 Total specialty1,331.91,203.81,249.91,243.5$1,262.404,959.6 Licensed stores$1,360.5$1,588.6$1,861.9$2,154.2$2,355.02,652.22,706.9 Licensed stores682.4625.6660.6683.6$737.102,706.9 CPG, foodservice and other$1,713.1$1,881.3$2,103.5$2,317.6$2,381.12,377.02,252.7 CPG, foodservice and other649.5578.2589.3559.9$525.302,252.7Total net revenues$14,866.8$16,447.8$19,162.7$21,315.9$22,386.8$24,7 19.525,278.4Total net revenues6,073.76,031.86,310.36,303.6$6,632.7025,278.4 Cost of sales including occupancy costs-$6,382.3-$6,858.8-$7,787.5- $8,511.1-$9,038.2-10,174.5-10,434.2 Cost of sales including occupancy costs-2,502.9-2,516.0-2,554.9-2,604.6($2,758.70)- 10,434.2 Store operating expenses-$4,286.1-$4,638.2-$5,411.1- $6,064.3-$6,493.3-7,193.2-7,449.2 Store operating expenses- 1,737.0-1,789.6-1,825.0-1,841.6($1,993.00)-7,449.2 Other operating expenses-$431.8-$457.3-$522.4-$545.4-$553.8-539.3- 532.2 Other operating expenses-141.6-134.3-148.0- 156.7($93.20)-532.2 Depreciation and amortization expenses- $621.4-$709.6-$893.9-$980.8-$1,011.4-1,247.0-1,321.6 Depreciation and amortization expenses-258.8-331.6-330.0- 326.6($333.40)-1,321.6 General and administrative expenses- $937.9-$991.3-$1,196.7-$1,360.6-$1,393.3-1,759.0-1,797.8 General and administrative expenses-379.1-405.8-468.7-
  • 2. 460.0($463.30)-1,797.8 Restructuring and impairments$0.0$0.0$0.0$0.0-$153.5-224.4-240.0 Restructuring and impairments-27.6-134.7-16.9-45.2($43.20)- 240.0 Litigation credit / charge- $2,784.1$20.2$0.0$0.0$0.0$0.0Income from equity investees89.452.771.487.7$67.80279.6Income from equity investees$251.4$268.3$249.9$318.2$391.4301.2279.6Operating income / loss1,116.1772.51,038.2956.6$1,015.703,783.0Operating income / loss- $325.4$3,081.1$3,601.0$4,171.9$4,134.7$3,883.33,783.0Gain resulting from acquisition of joint venture1,326.3Net interest and other income62.3483-$24.8074.9 Gain resulting from acquisition of joint venture$0.0$0.0$390.6$0.0$0.01,376.4$0.0 Interest income and other, net88.2313239$24.80126.0Loss on divestiture of certain operations$0.0$0.0-$61.1$0.0$0.0499.2 Interest expense-25.9-503($75.00)-77.0 Interest income and other, net$123.6$142.7$43.0$108.0$275.3191.4$126.0Earnings / loss before income taxes3,005.9363236$965.501,068.7 Interest expense-$28.1-$64.1-$70.5-$81.3-$92.5-170.3- $77.0Income tax expense / benefit-755.8-35-45-64($205.10)- 349.4Earnings / loss before income taxes- $229.9$3,159.7$3,903.0$4,198.6$4,317.5$5,780.0$1,068.7Net earnings / loss including noncontrolling interests2,250.18161,027932$760.403,534.721.83%Net earnings / loss attributable to noncontrolling interests-0.1-156-175- 176$0.20-505.9Income tax expense / benefit$238.7-$1,092.0- $1,143.7-$1,379.7-$1,432.6-1,262.0-349.4Net earnings / loss attributable to Starbucks2,250.0660852756$760.603,028.8Earnings before cumulative effect of change in accounting principle$8.8$2,067.7$2,759.3$2,818.9$2,884.9$4,518.0Per shareNet earnings / loss including noncontrolling interests$8.8$2,067.7$2,759.3$2,818.9$2,884.9$4,518.0$3,534. 7 Basic1.580.470.620.451.54Net earnings / loss attributable to noncontrolling interests-$0.5$0.4-$1.9-$1.2-$0.20.3-$505.9
  • 3. Diluted1.570.470.610.56$0.612.25Net earnings / loss attributable to Starbucks$8.3$2,068.1$2,757.4$2,817.7$2,884.7$4,518.3$3,028 .8Weighted average sharesPer share Basic1,421.01,394.91,377.1-1,240.6 Basic$0.01$1.37$1.84$1.91$1.99$3.27$2.52 Diluted1,434.61,406.61,388.51,348.71,253.4 Diluted$0.01$1.35$1.82$1.90$1.97$3.24$2.25Weighted average shares Basic1,498.51,506.31,495.91,471.61,449.51,382.7 Diluted1,524.51,526.31,513.41,486.71,461.51,394.6 SBUX BSBalance Sheet - As Reported 10KBalance Sheet - As Reported 10QTTM9/30/139/30/149/30/159/30/169/30/179/30/18TTM12/3 1/189/30/186/30/183/30/1812/31/17Cash and cash equivalents4761.68,7561,8922,1423,661 Cash and cash equivalents$2,575.7$1,708.4$1,530.1$2,128.8$2,462.3$8,756.3$ 4,761.6Short-term investments230.218285101107 Short-term investments$658.1$135.4$81.3$134.4$228.6$181.5$230.2Accou nts receivable, net721.4693855870852 Accounts receivable, net$561.4$631.0$719.0$768.8$870.4$693.1$721.4Inventories13 54.61,4011,3871,3761,313 Inventories$1,111.2$1,090.9$1,306.4$1,378.5$1,364.0$1,400.5$ 1,354.6Prepaid expenses and other current assets608.51,4631,3651,169951 Prepaid expenses and other CA$287.7$285.6$334.2$347.4$358.1$1,462.8$608.5Total current assets7,67612,4945,5835,6576,884 Deferred income taxes, net$277.3$317.4$0.0$0.0$0.0$0.0$0.0Long-term investments265268261293364 Total current assets$5,471.4$4,168.7$3,971.0$4,757.9$5,283.4$12,494.2$7,67 6.3Equity and cost investments336.1335323298288 Long-term investments$58.3$318.4$312.5$1,141.7$542.3$267.7$265.0Prop erty, plant and equipment, net6039.35,9295,6905,5775,379 Equity and cost investments$496.5$514.9$352.0$354.5$481.6$334.7$336.1Defe rred income taxes, net650135149165158 Property, plant and equipment,
  • 4. net$3,200.5$3,519.0$4,088.3$4,533.8$4,919.5$5,929.1$6,039.3 Other long-term assets472.7412405542526 Deferred income taxes, net$967.0$903.3$1,180.8$885.4$795.4$134.7$650.0Other intangible assets981.61,0421,1231,2281,246 Other long-term assets$185.3$198.9$415.9$403.3$362.8$412.2$472.7Goodwill3 560.33,5423,6483,7943,675 Other intangible assets$274.8$273.5$520.4$516.3$441.4$1,042.2$981.6Total Assets19,98124,15617,18217,55318,519 Goodwill$862.9$856.2$1,575.4$1,719.6$1,539.2$3,541.6$3,560 .3Total assets$11,516.7$10,752.9$12,416.3$14,312.5$14,365.6$24,156. 4$19,981.3Accounts payable1100.51,179921870852Accrued liabilities, net25642,6482,6712,6114,111 Accounts payable$491.7$533.7$684.2$730.6$782.51,1791,101Insurance reserves208.8214215222210 Accrued litigation charge$2,784.1$0.0$0.0$0.0$0.0$0.0$0.0Stored value card liability and deferred revenue1554.21,6431,4451,4841,668 Accrued liabilities$1,269.3$1,514.4$1,755.3$1,999.1$1,934.5$2,298.4$2 ,564.0Short-term debt-300- Current portion of long-term debt$0.0$0.0$0.0$399.9$0.0$349.9$0.0Total current liabilities5,4285,6845,5525,1876,841 Insurance reserves$178.5$196.1$224.8$246.0$215.2$213.7$208.8Long- term debt9130.79,0906,1496,1854,567 Stored value card liability & deferred revenue$653.7$794.5$983.8$1,171.2$1,288.5$1,642.9$1,554.2D eferred revenue6823.76,776-- Total current liabilities$5,377.3$3,038.7$3,648.1$4,546.8$4,220.7$5,684.2$5 ,427.5Other long-term liabilities1478.21,4311484.71,4641,352 Long-term debt$1,299.4$2,048.3$2,347.5$3,185.3$3,932.6$9,090.2$9,130. 7 Capitalized Long Term Leases$0.0$0.0$43.9$57.7$55.0$53.6Common stock1.21111 Deferred revenue$357.7$0.0$0.0$0.0$4.4$6,775.7$6,823.7Additional paid-in capital41.141414141 Deferred tax & other long term
  • 5. liabilities$392.2$557.0$632.0$695.9$1,376.9$1,478.2Retained earnings-25841,4574,1514,6365,835Accumulated other comprehensive income / loss-343.2-330-20333-125 Common stock$0.8$0.7$1.5$1.5$1.4$1.3$1.2Noncontrolling interest6.16677 Additional paid-in capital$282.1$39.4$41.1$41.1$41.1$41.1$41.1Total shareholders' equity-2,8851,1703,9914,7115,752 Retained earnings$4,130.3$5,206.6$5,974.8$5,949.8$5,563.2$1,457.4- $2,584.0Total equity-2,8791,1763,9974,7185,759 Accum other comprehensive inc / loss$67.0$25.3-$199.4-$108.4- $155.6-$330.3-$343.2Total liabilities and equity19,98124,15617,18217,55318,519 Noncontrolling interest$2.1$1.7$1.8$6.7$6.9$6.3$6.1 Total shareholders’ equity$4,480.2$5,272.0$5,818.0$5,884.0$5,450.1$1,169.5- $2,884.9 Total equity$4,482.3$5,273.7$5,819.8$5,890.7$5,457.0$1,175.8- $2,878.8Total Liabilities & Equity$11,516.7$10,752.9$12,416.3$14,312.5$14,365.6$24,156 .4$19,981.3Balance Sheet0000000 SBUX CFCash Flow Statement - As Reported 10K9/30/139/30/149/30/159/30/169/30/179/30/18 Net earnings including noncontrolling interests$8.8$2,067.7$2,759.3$2,818.9$2,884.9$4,518.0 Depreciation and amortization$655.6$748.4$933.8$1,030.1$1,067.1$1,305.9 Litigation charge$2,784.1-------- Deferred income taxes, net- $1,045.9$10.2$21.2$265.7$95.1$714.9 Income earned from equity method investees-$171.8-$182.7-$190.2-$250.2-$310.2- $242.8 Distributions received from equity method investees$115.6$139.2$148.2$223.3$186.6$226.8 Deconsolidation, gain / loss, amount----$0.0-$6.1-$93.5-$499.2 Gain resulting from acquisition / sale of equity in joint ventures-$80.1-$70.2-$394.3$0.0$0.0-$1,376.4 Other excluding gain resulting from acquisition / sale of equity in joint ventures$23.0$36.2$53.8$45.1$68.9$89.0 Loss on extinguishment of debt$0.0$0.0$61.1$0.0$0.0$0.0 Stock-
  • 6. based compensation$142.3$183.2$209.8$218.1$176.0$250.3 Excess tax benefit on share-based awards-$258.1-$114.4- $132.4-$122.8-$77.5$0.0 Goodwill, impairment loss---- $0.0$0.0$87.2$37.6 Cash provided / used by changes in OA & Liab$734.8-$2,209.8$278.8$353.0$89.7$6,913.7 Accounts receivable-$68.3-$79.7-$82.8-$55.6-$96.8$131.0 Other operating assets and liabilities$422.0$418.3$261.5$248.8-$4.7- $677.1 Inventories$152.5$14.3-$207.9-$67.5$14.0-$41.2 Accounts payable$88.7$60.4$137.7$46.9$46.4$391.6 Accrued litigation charge$0.0-$2,763.9-------- Stored value card liability$139.9$140.8$170.3$180.4$130.8$7,109.4Net cash provided / used by operating activities$3,643.1- $1,602.0$4,027.9$4,928.1$4,264.0$18,851.5 Purchases of investments-$785.9-$1,652.5-$567.4-$1,585.7-$674.4-$191.9 Other, net-$11.9-$19.1$6.8$24.9$1,108.8$464.6 Proceeds from sale and maturity of available-for-sale securities$60.2$1,454.8$600.6$680.7$1,054.5$459.0 Other- $11.9-$19.1$6.8$24.9$54.3$5.6 Maturities and calls of investments$980.0$456.1$18.8$27.9$149.6$45.3 Acquisitions, net of cash acquired-$610.4$0.0-$284.3$0.0$0.0-$1,311.3 Additions to PP&E excl proceeds from sale of equity in joint ventures & certain retail oper-$1,151.2-$1,160.9-$1,303.7- $1,440.3-$1,519.4-$1,976.4 Proceeds from sale of equity in joint ventures and certain retail operations$108.0$103.9$8.9$69.6$85.4$608.2Net cash provided / used by investing activities-$1,411.20-$817.70-$1,520.30- $2,222.90-$850.00-$2,361.5 Proceeds from issuance of long- term debt$749.7$748.5$848.5$1,254.5$750.2$5,584.1 Repayments of long-term debt-$35.2$0.0-$610.1$0.0- $400.0$0.0 Other excluding repayments of long-term debt$10.4-$6.9-$18.1-$8.4-$4.4-$41.2 Cash used for purchase of noncontrolling interest$0.0$0.0-$360.8$0.0$0.0$0.0 Proceeds from issuance of cs excl min tax withholdings on share-based awards$247.2$139.7$191.8$160.7$150.8$153.9 Minimum tax withholdings on share-based awards-$121.4- $77.3-$75.5-$106.0-$82.8-$62.7 Excess tax benefit on share-
  • 7. based awards$258.1$114.4$132.4$122.8$77.5$0.0 Cash dividends paid-$628.9-$783.1-$928.6-$1,178.0-$1,450.4- $1,743.4 Repurchase of common stock-$588.1-$758.6- $1,436.1-$1,995.6-$2,042.5-$7,133.5Net cash used / provided by financing activities-$108.2-$623.3-$2,256.5-$1,750.0- $3,001.6-$3,242.8Effect of exchange rate changes on cash and cash equivalents-$1.8-$34.1-$150.6-$3.5$10.8-$39.5Net increase / decrease in cash and cash equivalents$2,121.9- $3,077.1$100.5$951.7$423.2$13,207.7Cash and cash equivalents beginning of period$1,188.6$2,575.7$1,708.4$1,530.1$2,128.8$2,462.3Cash and cash equivalents end of period$3,310.5- $501.4$1,808.9$2,481.8$2,552.0$15,670.0Supplemental disclosure Cash paid during the period for Interest, net of capitalized interest-$34.4-$56.2-$69.5-$74.7-$96.6$137.1 Income taxes, net of refunds-$539.1-$766.3-$1,072.2-$878.7- $1,389.1-$1,176.9 SegmentSales Segment BreakdownForecasted Sales GrowthSEP '13SEP '14SEP '15SEP '16SEP '17SEP '18Sep '19Sep '20Sep '21Sep '22Sep '23Americas11,00111,98113,29314,79515,62016,732Segment sales forecasting is required - margins extra creditChina/Asia Pacific9171,1302,3962,9393,2404,474Details of how you are forecasting segment is up to you. You willChannel Development1,4111,5461,7311,9332,2572,297see in rows 64-75 a breakdown in company vs licensed stores & ChannelEurope, Middle East, & Africa1,1451,2951,2171,1259591,048You can also look at ticket and transaction. See "Comp Sales" tabAll Other Segments394497526524311168Total14,86716,44819,16321,316 22,38724,72000000Growth in salesAmericas10.7%8.9%11.0%11.3%5.6%7.1%China/Asia Pacific27.1%23.2%112.1%22.7%10.3%38.1%Channel Development9.4%9.6%12.0%11.6%16.8%1.8%Europe, Middle East, & Africa2.1%13.1%-6.0%-7.5%-14.8%9.3%Corporate & Other88.7%26.2%5.8%-0.3%-40.6%-45.9%TV Growth
  • 8. rateTotal12.0%10.6%16.5%11.2%5.0%10.4%- 100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO R:#DIV/0!0.0%% of whole SalesAmericas74.0%72.8%69.4%69.4%69.8%67.7%If you predict % of the whole and total growth line, back into growth of each segmentChina/Asia Pacific6.2%6.9%12.5%13.8%14.5%18.1%If you predict growth of each segment, then back into % of the wholeChannel Development9.5%9.4%9.0%9.1%10.1%9.3%Europe, Middle East, & Africa7.7%7.9%6.3%5.3%4.3%4.2%Corporate & Other2.6%3.0%2.7%2.5%1.4%0.7%Total100.00%100.00%100.0 0%100.00%100.00%100.0%0.0%0.0%0.0%0.0%0.0%Operating Income Segment BreakdownForecasted Operating Income GrowthSEP '13SEP '14SEP '15SEP '16SEP '17SEP '18Sep '19Sep '20Sep '21Sep '22Sep '23Americas2,3652,8093,2233,7423,6543,614Growth17.07%18. 76%14.75%16.09%-2.36%-1.07%China/Asia Pacific321373501632765867Growth4623.53%15.97%34.36%26. 19%21.12%13.39%Europe, Middle East, & Africa641191681529571Growth-74.58%85.67%41.11%-9.87%- 37.66%-24.87%Channel Development416557654807967927Growth22.06%34.10%17.35 %23.46%19.78%-4.13%Corporate & Other-3,492-777-945- 1,161-1,345-1,587Growth25.91%- 77.75%21.64%22.83%15.92%17.96%Consolidated Operating Income-3253,0813,6014,1724,1353,89300000% of wholeSEP '13SEP '14SEP '15SEP '16SEP '17SEP '18Americas- 726.9%91.2%89.5%89.7%88.4%92.8%China/Asia Pacific- 98.7%12.1%13.9%15.1%18.5%22.3%Europe, Middle East, & Africa-19.7%3.9%4.7%3.6%2.3%1.8%Channel Development- 127.7%18.1%18.2%19.4%23.4%23.8%Corporate & Other1073.0%-25.2%-26.2%-27.8%-32.5%- 40.8%Total100.0%100.0%100.0%100.0%100.0%100.0%Forecas ted Operating Margin GrowthOperating MarginSEP '13SEP '14SEP '15SEP '16SEP '17SEP '18Sep '18Sep '19Sep '20Sep '21Sep
  • 9. '22Americas21.5%23.4%24.2%25.3%23.4%21.6%ERROR:#DIV /0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:# DIV/0!China/Asia Pacific35.0%33.0%20.9%21.5%23.6%19.4%ERROR:#DIV/0!ER ROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0! Channel Development4.6%7.7%9.7%7.8%4.2%3.1%ERROR:#DIV/0!ER ROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0! Europe, Middle East, & Africa36.3%43.0%53.7%71.8%100.9%88.5%ERROR:#DIV/0!E RROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/ 0!Corporate & Other-886.8%-156.3%-179.7%-221.4%-432.2%- 942.5%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO R:#DIV/0!ERROR:#DIV/0!ERROR:#REF!ERROR:#REF!ERRO R:#REF!ERROR:#REF!ERROR:#REF!Total- 2.2%18.7%18.8%19.6%18.5%15.7%ERROR:#DIV/0!ERROR:# DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!Ameri casCAPEMEACorporateChannel DevelopmentTotal2018201720182017201820172018201720182 01720182017Net RevenuesCompany Operated stores14905.113996.44096.92906575.6551112.7197.319690.317 650.7Licensed stores18141617.3365.7327.4471.3407.71.22.62652.22355Other1 3.16.3116.81.154.5111.479.7124.5Total Revenues16732.2156204473.63240.21048958.7168.4311.32297. 32256.624719.522386.8Operating income GAAP3614.43653.6867.476561.594.5-1587.1- 1345.4927.19673883.3008114134.7Operating income non- GAAP3647.83657.7867.4765116.6112.4-1451.2- 1213.9927.19674107.7008114288.2Operating Margin GAAP21.6%23.4%19.4%23.6%5.9%9.9%-942.5%- 432.2%40.4%42.9%15.7%18.5%Operating Margin non GAAP21.8%23.4%19.4%23.6%11.1%11.7%-861.8%- 389.9%40.4%42.9%16.6%19.2% Historicals & ForecastsHistorical and Forecasted ValuesRevenue Growth Driven by
  • 10. …201320142015201620172018TTM20192020202120222023Seg ment?Transaction and Price?<---------------------- Historical --- -----------------><---------------------- Projection ------------------ -->% Change in Revenue201320142015201620172018TTM201920202021202220 23TVOverall Revenue growth rate10.6%16.5%11.2%5.0%10.4%2.3%Growth rates should be connected to segment tabCompany Operated Revenue10.0%17.1%10.8%4.8%11.6%3.2%Or can build up growth rates in rows 4 thru … in thisLicensed Store Revenue16.8%17.2%15.7%9.3%12.6%2.1%tab based on alternative forecastingCPG & Other9.8%11.8%10.2%2.7%- 0.2%-5.2%Same Store Sales Systemwide7%6%7%5%3%2%4%Same Store Americas7%6%7%6%3%2%4%Same Store CAP9%7%9%3%3%1%3%% of SalesCost of salesCost of sales wo depreciation & amortizationStore operating expensesOther operating incom expenseGross Profit MarginTotal Depreciation and Amortization expensesRemember part of d&a was in COGS - get total from CF statementGeneral & administrative expensesRestructuring & impairments & LitigationI'm assuming these costs are non-recurring as the majority ofIncome from equity investorsrestructuring seems to be done. If you disagree, add this cost inEBIT Margin GAAPNon-GAAP EBIT MarginNon-GAAP EBITDA MarginTax rate (effective tax rate)103.8%34.6%29.3%32.9%33.2%21.8%Capital Expenditures use Net PPE % of salesuse PPE1 - PPE0 + DepreciationCapital Expenditures using CF Stmt % of salesUse CF Statement methodAcquisitions4.1%0.0%1.5%0.0%0.0%5.3%only forecast if ongoing and if so incl in DCF% of Given Intangible and PP&E as notedAmortization as a % of Intangible AssetsDepreciation as a % of PP&E% of Given Intangible and PP&E as notedAmortization as a % of Intangible AssetsDepreciation as a % of PP&EInvested Capital (% of Sales or Days)201320142015201620172018TTM20192020202120222023
  • 11. Cash and Cash Equivalents (actual)Operating Cash (% of sales - hard coded in)do not assume 2% unless appropriate - look at historical numbers (below) and peer dataDays Sales OutstandingDays Inventory OutstandingPrepaid Expenses (% of sales)Days Payables OutstandingAccrued liabilities % of SalesInsurance Reserves % of SalesStored Value card liability % of SalesCash Conversion Cycle0.000.000.000.000.000.000.000.000.000.000.000.00% of SalesEquity & Cost InvestmentsPlant, property & equip, netIntangible AssetsNet investment in direct financing leasesOther assets net of Other liabilities$ millionsGoodwill862.9856.21575.41719.61539.23541.63560.3H istorical Cash and Revenue2005200620072008200920102011201220132014201520 1620172018Cash and Cash Equivalents3003134383236661450205120373233.81843.81611. 42263.22690.98937.799805Total Sales Revenue63697787941110383977510707117001330014866.8164 47.819162.721315.922386.824719.500976Cash as a % of Revenue4.71%4.02%4.65%3.11%6.81%13.54%17.53%15.32%2 1.75%11.21%8.41%10.62%12.02%36.16%Avg prior toLong termSince '12ultra low ratesaverageaverageCash as a % of Revenue4.12%10.28%13.22%Left out 2018 as that was the year they tripled their leverage ROICROIC & Economic ProfitROIC Including Goodwill20132014201520162017201820192020202120222023R eturn on avg invested capital0.0%0.0%0.0%0.0%0.0%0.0%ERROR:#DIV/0!ERROR:# DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!Return on avg invested capital with oper leaseReturn on avg unadjusted invested cap47.0%46.4%47.0%43.6%38.6%0.0%0.0%0.0%0.0%0.0%Retu rn on avg unadjusted invested cap w lease$ Millions20132014201520162017201820192020202120222023Ec onomic profit capital chargeEconomic profit spreadNOPLAT (adjusted values)20132014201520162017201820192020202120222023Tot
  • 12. al Revenues14,866.816,447.819,162.721,315.922,386.824,719.5Ca n break this down by geography or Company/ Licensed/ CPGCompany Operated Sales11,793.212,977.915,197.316,844.117,650.719,690.3Licens ed Store Sales1,360.51,588.61,861.92,154.22,355.02,652.2CPG & Other1,713.11,881.32,103.52,317.62,381.12,377.0Cost of sales(6,382.3)(6,858.8)(7,787.5)(8,511.1)(9,038.2)(10,174.5)Co st of sales wo depreciation & amortization(6,348.1)(6,820.0)(7,747.6)(8,461.8)(8,982.5)(10,1 15.6)Store operating expenses(4,286.1)(4,638.2)(5,411.1)(6,064.3)(6,493.3)(7,193.2) Other operating incom expense(431.8)(457.3)(522.4)(545.4)(553.8)(539.3)Gross Profit3,800.84,532.35,481.66,244.46,357.26,871.4Total Depreciation and Amortization expenses(655.6)(748.4)(933.8)(1,030.1)(1,067.1)(1,305.9)0.00.0 0.00.00.0General & administrative expenses(937.9)(991.3)(1,196.7)(1,360.6)(1,393.3)(1,759.0)Rest ructuring & impairments & Litigation(2,784.1)20.20.00.0(153.5)(224.4)I am assuming this is non-recurring. If you believe differently, then includeIncome from equity investors251.4268.3249.9318.2391.4301.2EBIT(325.4)3,081.13, 601.04,171.94,134.73,883.30.00.00.00.00.0Reported Operating Income GAAP(325.4)3,081.13,601.04,171.94,134.73,883.3Adjusted Operating Income Non- GAAP2,458.73,060.93,601.04,171.94,288.24,107.70.00.00.00.0 0.0Tax expenseNOPLAT Non-GAAPNon-GAAP EBITDADepreciation and Amortization CF Stmt655.6748.4933.81,030.11,067.11,305.90.00.00.00.00.0Depr eciation and Amortization Inc Stmt621.4709.6893.9980.81,011.41,247.0Break Out Depreciation & Amortization (10K)DepreciationAmortizationCapital Expenditures using Net
  • 13. PPE formulause Net PPE1 - Net PPE0 + DepreciationCapital Expenditures using CF STMT1,151.21,160.91,303.71,440.31,519.41,976.4use % of sales methodAcquisitions (only incl in FCF if ongoing strategy)610.40.0284.30.00.01,311.3only forecast if ongoing and if so incl in DCFInvested Capital$ millions20132014201520162017201820192020202120222023O perating Cash0.00.00.00.00.00.0Accounts receivable561.4631.0719.0768.8870.4693.1Inventories1111.210 90.91306.41378.51364.01400.5Prepaid expenses and other current assets287.7285.6334.2347.4358.11462.8Operating current assets1960.32007.52359.62494.72592.53556.4Accounts payable491.7533.7684.2730.6782.51,179.3Accrued expenses and other current liabilities1,269.31,514.41,755.31,999.11,934.52,298.4Insurance Reserves178.5196.1224.8246.0215.2213.7Stored Card & Deferred Revenue653.7794.5983.81,171.21,288.51,642.9Operating current liabilities2,593.23,038.73,648.14,146.94,220.75,334.3Operating working capital-632.9-1,031.2-1,288.5-1,652.2-1,628.2- 1,777.9Equity & Cost Investments496.5514.9352.0354.5481.6334.7Plant, property & equip, net3200.53519.04088.34533.84919.55929.1Other LT Assets185.3198.9415.9403.3362.8412.2Intangible assets274.8273.5520.4516.3441.41042.2Goodwill862.9856.2157 5.41719.61539.23541.6Deferred Revenue(357.7)0.00.00.0(4.4)(6,775.7)Invested Capital4,029.44,331.35,663.55,875.36,111.92,706.2Total Funds Invested (Sources)Current portion of LT Debt0.00.00.0399.90.0349.9Long-term debt1299.42048.32347.53185.33932.69090.2Capitalized Lease Obligations0.00.043.957.755.053.6Total Debt1299.42048.32391.43642.93987.69493.7Deferred Income Tax-1244.3-828.5-623.8-253.4-99.51242.2Total Debt & Equivalents55.11219.81767.63389.53888.110735.9Shareholder
  • 14. Equity4482.35273.75819.85890.75457.01175.8Equity & Equity Equivalents4482.35273.75819.85890.75457.01175.8Non- operating AssetsExcess Cash3233.81843.81611.42263.22690.98937.8Investments58.331 8.4312.51141.7542.3267.7Litigation Charge- 2784.10.00.00.00.00.0Total Non-operating assets508.02162.21923.93404.93233.29205.5Adjusted Invested Capital4,029.44,331.35,663.55,875.36,111.92,706.2Check invested capitalbalancebalancebalancebalancebalancebalanceUnadjusted Invested Capital5781.77322.08211.29533.69444.610669.57963.37963.37 963.37963.37963.3 WACCStarbucks CorporationSettlement3/7/19Price History: Beta3 yearCan choose other time periods if relevant Amount Outstanding in millions of USD5 yearBalance SheetInstrument IDDescriptionAmount OutCoupon RateCoupon TypeIssue DateMaturity DateIssue CurrSeniorityPriceYTWMarket Value% of TotalSBUXS&PNotes/BondsDatePriceDatePrice855244AL3Star bucks Corp500.00.022Fixed11/201711/2020USDSNR Unsec98.86103/01/1970.8503/01/192803.691855244AJ8Starbuc ks Corp750.00.021Fixed02/201602/2021USDSNR Unsec98.492.91202/22/1971.302/22/192792.6710222261855244 AG4Starbucks Corp500.00.027Fixed06/201506/2022USDSNR Unsec99.043.01302/15/1970.7102/15/192775.597100523855244 AD1Starbucks Corp750.00.0385Fixed09/201310/2023USDSNR Unsec102.563.21402/08/1969.7502/08/192707.88038489778552 44AN9Starbucks Corp1,000.00.031Fixed02/201803/2023USDSNR Unsec99.823.15502/01/1968.1102/01/192706.533459959385524 4AQ2Starbucks Corp1,250.00.038Fixed08/201808/2025USDSNR Unsec101.323.56601/25/1967.0901/25/192664.76050957338552 44AK5Starbucks Corp500.00.0245Fixed05/201606/2026USDSNR
  • 15. Unsec91.93.73701/18/1964.701/18/192670.7117125111855244A P4Starbucks Corp600.00.035Fixed02/201803/2028USDSNR Unsec97.713.8801/11/1963.7301/11/192596.257301564855244A R0Starbucks Corp750.04.000%Fixed08/201811/2028USDSNR Unsec101.353.83901/04/1963.5701/04/192531.94341155585524 4AH2Starbucks Corp350.00.043Fixed06/201506/2045USDSNR Unsec93.84.711012/28/1863.3912/28/182485.735215544185524 4AM1Starbucks Corp500.00.0375Fixed11/201712/2047USDSNR Unsec4.721112/21/1861.3912/21/182416.6183852099855244AS 8Starbucks Corp1,770.30.045Fixed08/201811/2048USDSNR Unsec96.374.731212/14/1865.3412/14/182599.95434572981312 /07/1865.4712/07/182633.078820587Book ValueMarket Value1411/30/1866.7211/30/182760.17425656321511/23/1865. 711/23/182632.5566345943Weighted Avg Kd1611/16/1868.1611/16/182736.26898803571711/09/1868.611 /09/182781.0091567204MV (millions)Cap StructureDefault Risk Prem1811/02/1864.3211/02/182723.0582781224MV DebtKd with spread1910/26/1858.0710/26/182658.6851131378MV Equity2010/19/1858.6610/19/182767.7804874457Total capitalInterest Expense2110/12/1856.4510/12/182767.126018181Kd with BV Debt2210/05/1855.7610/05/182885.5662522712BetaUnlevered Beta2309/28/1856.8409/28/182913.978139886Risk freeSecurity Usedsource with a screen shot2409/21/1857.4509/21/182929.6671956253Equity Risk premiumMethod Used2509/14/1854.7509/14/182904.9753853014Cost of Equity (Ke)2609/07/1854.8609/07/182871.68152830212708/31/1853.45 08/31/182901.5176770405Tax Rate2808/24/1852.7508/24/182874.6891438911WACC w/ Weighted Avg MV2908/17/1853.5608/17/182850.1316116041WACC w/ Default Prem MV3008/10/1851.5108/10/182833.28363168223108/03/1852.23
  • 16. 08/03/182840.3535543808BV (millions)Cap StructureWACC Results3207/27/1852.1507/27/182818.8176262962BV Debt$0.00Market Value0.00%3307/20/1850.9107/20/182801.8280880917BV EquityMarket Value0.00%3407/13/1851.6207/13/182801.3113726617Total capitalBook Value0.00%3507/06/1848.9807/06/182759.82191582513606/29/ 1848.8506/29/182718.3734650222WACC w/ BV3706/22/1851.2406/22/182754.87699510963806/15/1857.110 6/15/182779.6630272875YTD3906/08/1856.606/08/182779.028 5906191Historical20132014201520162017201820194006/01/18 56.9106/01/182734.6188550041Fiscal Yr End Share Price$38.49$37.73$56.84$54.14$53.71$56.84$70.854105/25/18 57.9205/25/182721.3279562726Basic shs outstanding1,498.501,506.301,495.901,471.601,449.501,382.70 1,244.004205/18/1857.1605/18/182712.9747135606Diluted shs outstanding1,524.501,526.301,513.401,486.701,461.501,394.60 1,253.404305/11/1857.2705/11/182727.71592755584405/04/185 7.6805/04/182663.42033730044504/27/1858.3604/27/182669.90 62717154604/20/185804/20/182670.14175564744704/13/1859.2 404/13/182656.29690565364804/06/1858.3404/06/182604.4693 8452934903/29/1857.8903/29/182640.86599032935003/23/1856 .3103/23/182588.26279205135103/16/185903/16/182752.01178 754965203/09/1858.4603/09/182786.56510275315303/02/1856. 9303/02/182691.25276867665402/23/1856.1402/23/182747.298 54916935502/16/1856.4802/16/182732.21983679725602/09/185 4.5802/09/182619.54559492315702/02/1855.7702/02/182762.12 533427265801/26/1857.9901/26/182872.86783924315901/19/18 61.2601/19/182810.3026834926001/12/1860.401/12/182786.244 14318656101/05/1859.6101/05/182743.14777329756212/29/175 7.4312/29/172673.61052315176312/22/1757.312/22/172683.337 27433146412/15/1758.2912/15/172675.80798122696512/08/175 8.6112/08/172651.50100027346612/01/1757.3212/01/172642.21 576474666711/24/1756.811/24/172602.42470781256811/17/175 6.9311/17/172578.85432396386911/10/1757.0411/10/172582.30
  • 17. 003925497011/03/1756.0311/03/172587.83605703797110/27/17 54.8810/27/172581.06570313437210/20/1754.5710/20/172575.2 0587788917310/13/1755.7210/13/172553.16937285037410/06/1 755.1710/06/172549.33150890217509/29/1753.7109/29/172519. 35967190617609/22/1755.0909/22/172502.22222454067709/15/ 1754.6709/15/172500.22585762027809/08/1753.4909/08/17246 1.43364392227909/01/1754.9309/01/172476.55238938888008/2 5/1754.3608/25/172443.04579834118108/18/1752.708/18/17242 5.55216966468208/11/1753.1808/11/172441.32024056448308/0 4/1755.4408/04/172476.83099654618407/28/175407/28/172472. 0985372068507/21/1757.9807/21/172472.5358544528607/14/17 58.7607/14/172459.27099082148707/07/1758.0407/07/172425.1 7696142638806/30/1758.3106/30/172423.4088910638906/23/17 59.8106/23/172438.29691186319006/16/1760.1406/16/172433.1 5082886149106/09/1762.1906/09/172431.77236500319206/02/1 764.5706/02/172439.07024998039305/26/1763.305/26/172415.8 2248039039405/19/1761.3605/19/172381.72670416759505/12/1 759.9305/12/172390.89722613839605/05/1760.9505/05/172399. 2857104259704/28/1760.0604/28/172384.19551781389804/21/1 760.6104/21/172348.6949580629904/13/1757.5104/13/172328.9 53347491610004/07/1758.0204/07/172355.544991713410103/3 1/1758.3903/31/172362.718220397310203/24/1756.8103/24/172 343.978139911410303/17/1755.7803/17/172378.253051299310 403/10/1754.5303/10/172372.597751765210503/03/1757.103/03 /172383.1170365810602/24/1757.4802/24/172367.34424697251 0702/17/1757.3502/17/172351.16169922310802/10/1756.2202/1 0/172316.097069587110902/03/1755.0602/03/172297.41585705 6111001/27/1756.1201/27/172294.689728906911101/20/1757.6 601/20/172271.314729237711201/13/1757.8501/13/172274.637 742895211301/06/1757.1301/06/172276.981444562111412/30/1 655.5212/30/162238.826681707611512/23/1657.0112/23/16226 3.788658550911612/16/1657.6612/16/162258.07240233281171 2/09/1658.7512/09/162259.52867686511812/02/1657.2112/02/1 62191.953667101611911/25/1657.4311/25/162213.3485684312 12011/18/1655.7711/18/162181.901786964212111/11/1653.931 1/11/162164.45075019112211/04/1652.7511/04/162085.176376
  • 18. 976312310/28/1653.5310/28/162126.4075651112410/21/1653.6 310/21/162141.161911436912510/14/1653.0810/14/162132.978 465079212610/07/1653.4610/07/162153.739363428412709/30/1 654.1409/30/162168.272089637312809/23/1654.4309/23/16216 4.694807617912909/16/1653.7409/16/162139.16460301541300 9/09/1654.3509/09/162127.805573848813109/02/1656.1809/02/ 162179.984202579113208/26/1657.2908/26/162169.040232267 513308/19/1654.9408/19/162183.868154788913408/12/1655.47 08/12/162184.05093984913508/05/1655.908/05/162182.868374 886113607/29/1658.0507/29/162173.603859888413707/22/1657 .907/22/162175.029062357913807/15/1657.4107/15/162161.741 334034613907/08/1656.5107/08/162129.897981779914007/01/1 656.9907/01/162102.953492236714106/24/1654.6806/24/16203 7.405184363414206/17/1655.3106/17/162071.21969456881430 6/10/1654.86506/10/162096.071013309214406/03/1654.6106/03 /162099.128574026714505/27/1655.1505/27/162099.060460947 714605/20/1654.6205/20/162052.318052897814705/13/1655.82 05/13/162046.612922614214805/06/1656.3105/06/162057.1424 21360614904/29/1656.2304/29/162065.296301005115004/22/16 57.6804/22/162091.580101870615104/15/1660.5104/15/162080. 732964823415204/08/1661.0404/08/162047.597132405215304/ 01/1661.0204/01/162072.779072250315403/24/1658.3603/24/16 2035.935905695515503/18/1659.703/18/162049.576776601815 603/11/1657.5903/11/162022.189572238715703/04/1658.703/04 /161999.987225858815802/26/1658.3402/26/161948.053851304 15902/19/1657.6702/19/161917.78361174516002/12/1655.8602/ 12/161864.775330089816102/05/1654.4902/05/161880.0539328 83916201/29/1660.7701/29/161940.239677818416301/22/1659. 1701/22/161906.904075585716401/15/165801/15/161880.32779 6386716501/08/1656.6301/08/161922.03479267416612/31/1560 .0312/31/152043.936862660716712/24/1560.3212/24/152060.98 8299851116812/18/1558.6212/18/152005.549716912216912/11/ 1559.8212/11/152012.373697598217012/04/1561.7512/04/1520 91.687423832917111/27/1562.1811/27/152090.1067763178172 11/20/1561.9911/20/152089.166223191217311/13/1559.7411/13 /152023.039432971217411/06/1561.9711/06/152099.203489927
  • 19. 317510/30/1562.5710/30/152079.359837467217610/23/1562.61 10/23/152075.151278069417710/16/1559.9310/16/152033.1103 96569217810/09/1560.0710/09/152014.892646131917910/02/15 58.0810/02/151951.359831429618009/25/1557.9909/25/151931. 339903187618109/18/1556.8409/18/151958.032829434418209/ 11/1556.5309/11/151961.045671910718309/04/1554.2809/04/15 1921.224403313618408/28/1555.6308/28/151988.87140722718 508/21/1552.8408/21/151970.889064541418608/14/1557.108/14 /152091.543640894218708/07/1557.208/07/152077.5684171683 18807/31/1557.9307/31/152103.835365137118907/24/1557.290 7/24/152079.649212624619007/17/1555.6907/17/152126.64394 3924219107/10/1554.5707/10/152076.618352355719207/02/155 4.2407/02/152076.77570025719306/26/1554.6206/26/152101.48 7386961519406/19/1553.9306/19/152109.988278001119506/12/ 1552.6306/12/152094.105654248319606/05/1552.1906/05/1520 92.830948425619705/29/1551.9605/29/152107.3895783551198 05/22/1551.4805/22/152126.061408869219905/15/1550.805/15/ 152122.734129766420005/08/1549.7805/08/152116.095111675 520105/01/1550.2905/01/152108.290280508620204/24/1551.84 04/24/152117.689928749120304/17/1547.6204/17/152081.1777 53690220404/10/1548.1704/10/152102.055348808920504/02/15 47.19504/02/152066.964854166120603/27/1547.53503/27/1520 61.021996810120703/20/1548.7303/20/152108.0973212684208 03/13/1546.64503/13/152053.398255701720903/06/1546.10750 3/06/152071.262106305721002/27/1546.742502/27/152104.503 249324321102/20/1546.75502/20/152110.300899164321202/13/ 1545.7902/13/152096.987901915121302/06/1544.502/06/15205 5.472241825721401/30/1543.76501/30/151994.9904120547215 01/23/1544.1101/23/152051.821811776321601/16/1540.30501/1 6/152019.418653780221701/09/1539.89501/09/152044.8099000 57821801/02/1540.7201/02/152058.204778724321912/26/1440. 91512/26/142088.766062837922012/19/1439.7212/19/142070.6 46955389222112/12/1441.62512/12/142002.334239680222212/ 05/1441.78512/05/142075.368192627622311/28/1440.60511/28/ 142067.56204452722411/21/1439.8811/21/142063.5024452877 22511/14/1439.0611/14/142039.816872100922611/07/1438.895
  • 20. 11/07/142031.921516876922710/31/1437.7810/31/142018.0545 03296422810/24/1437.90510/24/141964.580296631522910/17/1 436.7710/17/141886.764039916623010/10/1437.2310/10/14190 6.12968272123110/03/1437.94510/03/141967.90207875752320 9/26/1437.58509/26/141982.845938128923309/19/1438.03509/1 9/142010.396723604323409/12/1437.73509/12/141985.5362909 21423509/05/1438.97509/05/142007.711908239123608/29/1438 .90508/29/142003.367695451323708/22/1438.6408/22/141988.4 02434926823808/15/1438.45508/15/141955.062629353623908/ 08/1438.8108/08/141931.59315127824008/01/1438.4908/01/141 925.151800196924107/25/1439.3707/25/141978.338887822524 207/18/1438.9707/18/141978.218353696424307/11/1439.307/11 /141967.569161226924407/03/1439.5307/03/141985.437118063 624506/27/1438.9706/27/141960.960515834824606/20/1438.30 6/20/141962.873446499624706/13/1437.34506/13/141936.1593 52325124806/06/1437.66506/06/141949.440726149524905/30/1 436.6205/30/141923.572660658425005/23/1435.9905/23/14190 0.533228592625105/16/1435.4705/16/141877.85527318812520 5/09/1435.14505/09/141878.475687840425305/02/1435.305/02/ 141881.138137535425404/25/1435.72504/25/141863.40067144 0125504/17/1435.07504/17/141864.851377063325604/11/1434. 36504/11/141815.685087153625704/04/1435.77504/04/141865. 09341386925803/28/1436.8503/28/141857.620787361125903/2 1/1438.35503/21/141866.520737280526003/14/1437.13503/14/1 41841.13350895226103/07/1436.53503/07/141878.0391851899 02/28/1435.4802/28/141859.4493719912 DCFHistorical valuesForecasted Values(millions)201320142015201620172018CAGR201920202 02120222023TVSales14,866.816,447.819,162.721,315.922,386. 824,719.50.00.00.00.00.0growth rate10.6%16.5%11.2%5.0%10.4%10.7%- 100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO R:#DIV/0!0.0%COGS11,066.011,915.513,681.115,071.516,029. 617,848.10.00.00.00.00.0Gross profit3,800.84,532.35,481.66,244.46,357.26,871.40.00.00.00.00 .0gross
  • 21. margin25.6%27.6%28.6%29.3%28.4%27.8%ERROR:#DIV/0!ER ROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0! SG&A937.9991.31196.71360.61393.31759.00.00.00.00.00.0Oth er income (expense)251.4268.3249.9318.2391.4301.20.00.00.00.00.0EBIT DA3,114.33,809.34,534.85,202.05,355.35,413.6EBITDA margin20.9%23.2%23.7%24.4%23.9%21.9%11.7%ERROR:#DI V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR: #DIV/0!EBITDA growth22.3%19.0%14.7%2.9%1.1%- 100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO R:#DIV/0!Depreciation & Amortization655.6748.4933.81030.11067.11305.90.00.00.00.00. 0EBIT2,458.73,060.93,601.04,171.94,288.24,107.70.00.00.00.0 0.0EBIT or Operating margin16.5%18.6%18.8%19.6%19.2%16.6%10.8%ERROR:#DI V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR: #DIV/0!EBIT growth24.5%17.6%15.9%2.8%-4.2%- 100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO R:#DIV/0!tax expense536.8668.3786.2910.9936.3896.90.00.00.00.00.0NOPL AT1,921.92,392.62,814.83,261.03,351.93,210.8plus: Depr and Amortization655.6748.4933.81,030.11,067.11,305.90.00.00.00.0 0.0less: Capex1,151.21,160.91,303.71,440.31,519.41,976.411.4%Decide which method you are using for capexless: Change NWC734.8- 398.3-257.3-363.724.0- 149.7FCF2,161.11,581.82,187.62,487.12,923.62,390.6Investme nt Rate- 12.45%33.89%22.28%23.73%12.78%25.54%ERROR:#DIV/0!E RROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/ 0!Net Reinvestment- 239.2810.8627.2773.9428.3820.20.00.00.00.00.0ERROR:#DIV/ 0!TimeWACCPV of FCFMultiple Approach to Terminal ValueImpliedKeyFCFgrowthEquity Value w/ MultipleDrivergrowthSum of PV FCF- 0Enterprise Value0.0Terminal ROICwhen deciding LT ROIC, look at
  • 22. historical, industry and numbers that make the investment rate make senseExit Multiple (EV/EBITDA)Less: debtTerminal growth rate0.00%0.00%EBITDA (2023)0.0Terminal ValueTerminal ValuePV Terminal Value- 0- 0PV Terminal Value0.0Equity ValueEnterprise Value- 0- 0% of Enterprise ValueERROR:#DIV/0!% of Enterprise ValueERROR:#DIV/0!ERROR:#DIV/0!Enterprise Value- 0Shares outstandingEquity ValueEquity Value/ shareERROR:#DIV/0!Equity Value/ shareERROR:#DIV/0!ERROR:#DIV/0!DeviationERROR:#DIV/ 0!Equity ValueExit MultipleEquity ValuePerpetuity Growth RateWACCWACCToggleWACCDon't automatically use my variation on yourEV/EBITDAsensitivity analysis. Determine what makesgsense for SBUX given their historyTTM EPSMultipleROICImplied Equity Value/ shareERROR:#DIV/0!ERROR:#DIV/0!Implied P/E RatioERROR:#DIV/0!ERROR:#DIV/0!Historical Average P/E ratio26.58fiscalexcluded 2013 as an outlierHistorical Average P/E ratio27.50CalendarCurrent Ratio28.17LT Industry AverageMultipleROICImplied Enterprise Value$0.00$0.00Implied EV/EBITDA Ratio0.000.00Historical Average EV/EBITDA ratio LT14.60Historical Average EV/EBITDA ratio 5 yr20.96Current EV/EBITDA14.61 LT Industry Average DCF w oper leaseHistorical valuesForecasted Values(millions)201320142015201620172018CAGR201920202 02120222023TVSales14,866.816,447.819,162.721,315.922,386. 824,719.50.00.00.00.00.0growth rate10.6%16.5%11.2%5.0%10.4%10.7%- 100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO R:#DIV/0!COGS11,066.011,915.513,681.115,071.516,029.617,8 48.10.00.00.00.00.0Gross profit3,800.84,532.35,481.66,244.46,357.26,871.40.00.00.00.00 .0gross margin25.6%27.6%28.6%29.3%28.4%27.8%ERROR:#DIV/0!ER ROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!
  • 23. SG&A937.9991.31196.71360.61393.31759.00.00.00.00.00.0Oth er income (expense)251.4268.3249.9318.2391.4301.20.00.00.00.00.0EBIT DA3,114.33,809.34,534.85,202.05,355.35,413.6EBITDA margin20.9%23.2%23.7%24.4%23.9%21.9%11.7%ERROR:#DI V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR: #DIV/0!EBITDA growth22.3%19.0%14.7%2.9%1.1%- 100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO R:#DIV/0!Depreciation & Amortization655.6748.4933.81030.11067.11305.90.00.00.00.00. 0EBIT2,458.73,060.93,601.04,171.94,288.24,107.70.00.00.00.0 0.0EBIT or Operating margin16.5%18.6%18.8%19.6%19.2%16.6%10.8%ERROR:#DI V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR: #DIV/0!EBIT growth24.5%17.6%15.9%2.8%-4.2%- 100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO R:#DIV/0!tax expense536.8668.3786.2910.9936.3896.90.00.00.00.00.0NOPL AT1,921.92,392.62,814.83,261.03,351.93,210.8plus: Depr and Amortization655.6748.4933.81,030.11,067.11,305.90.00.00.00.0 0.0less: Capex1,151.21,160.91,303.71,440.31,519.41,976.411.4%Decide which method you are using for capexless: Change NWC734.8- 398.3-257.3-363.724.0- 149.7FCF2,161.11,581.82,187.62,487.12,923.62,390.6Investme nt Rate- 12.45%33.89%22.28%23.73%12.78%25.54%ERROR:#DIV/0!E RROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/ 0!Net Reinvestment- 239.2810.8627.2773.9428.3820.20.00.00.00.00.0TimeWACCPV of FCFMultiple Approach to Terminal ValueImpliedKeyFCFgrowthEquity Value w/ MultipleDrivergrowthSum of PV FCF- 0Enterprise Value0.0Terminal ROICwhen deciding LT ROIC, look at historical, industry and numbers that make the investment rate make senseExit Multiple (EV/EBITDA)Less: debtTerminal
  • 24. growth rate0.00%0.00%EBITDA (2023)0.0Terminal ValueTerminal ValuePV Terminal Value- 0- 0PV Terminal Value0.0Equity ValueEnterprise Value- 0- 0% of Enterprise ValueERROR:#DIV/0!% of Enterprise ValueERROR:#DIV/0!ERROR:#DIV/0!Enterprise Value- 0Shares outstandingEquity ValueEquity Value/ shareERROR:#DIV/0!Equity Value/ shareERROR:#DIV/0!ERROR:#DIV/0!DeviationERROR:#DIV/ 0!Equity ValueExit MultipleEquity ValuePerpetuity Growth RateWACCWACCToggleWACCDon't automatically use my variation on yourEV/EBITDAsensitivity analysis. Determine what makesgsense for SBUX given their historyTTM EPSMultipleROICImplied Equity Value/ shareERROR:#DIV/0!ERROR:#DIV/0!Implied P/E RatioERROR:#DIV/0!ERROR:#DIV/0!Historical Average P/E ratio26.58fiscalexcluded 2013 as an outlierHistorical Average P/E ratio27.50CalendarCurrent Ratio28.17LT Industry AverageMultipleROICImplied Enterprise Value$0.00$0.00Implied EV/EBITDA Ratio0.000.00Historical Average EV/EBITDA ratio LT14.60Historical Average EV/EBITDA ratio 5 yr20.96Current EV/EBITDA14.61 LT Industry Average Operating LeasesRentAdjustedPMTTimeLeaseLeasePV LeaseFormulasRent PMTLease201801424.5Avg lease life = Year 6 Lease/ average yrs 1-5201801424.52019113451345Depr Exp = PV oper lease/ lease life201911345202021277.61277.6Adj Debt = Debt + PV oper Lease202021277.6202131194.51194.5Adj Invested Capital = Adj Debt + Equity202131194.5202241091.51091.5Adj EBIT = EBIT - rent exp + depr lease exp202241091.520235962.2962.2Adj ROIC = Adj EBIT (1-t)/ Adj Invested Capital20235962.2202463541.020246354178kdAvg yr 1-5Sum PV LeaseAvg lease lifeDepr expNo adjustmentEBIT4,107.7Debt9,493.7Inv Capital10,669.5Equity1,175.8Tax
  • 25. rate21.8%D/E8.07ROIC30.09%PP&E5,929.1With adjustmentEBIT w/ adjust5,452.7Debt w/ adjust9,493.7Inv Capital10,669.5Equity1,175.8Tax rate21.8%D/E8.07ROIC39.95%PP&E adjusted5,929.1 Cash & Capex PeersSpecific CompetitorsMcDonaldsDEC '18DEC '17DEC '16DEC '15DEC '14DEC '13DEC '12DEC '11DEC '10DEC '09DEC '08 Cash and equivalents8662,4641,2237,6862,0782,7992,3362,3362,3871,79 62,063Total revenues21,02522,82024,62225,41327,44128,10627,56727,0062 4,07522,74523,522 Capital expenditures2,7421,8541,8211,8142,5832,8253,0492,7302,1361, 9522,136Cash as % of Sales4.12%10.80%4.97%30.24%7.57%9.96%8.47%8.65%9.92% 7.90%8.77%Capital expenditure as a % of Sales13.04%8.12%7.40%7.14%9.41%10.05%11.06%10.11%8.87 %8.58%9.08%Shake ShackDEC '18DEC '17DEC '16DEC '15DEC '14DEC '13DEC '12 Cash and cash equivalents2521.511.670.82.713.157.0Total revenue459358.8268.5190.6118.582.557.0Company operated stores and IPO 2015 - see cash go up a lot Capital expenditures8861.5354.4332.1228.5216.1911.04Cash as % of Sales5.39%5.99%4.32%37.17%2.26%15.86%NMCapital expenditure as a % of Sales19.05%17.15%20.27%16.85%24.06%19.64%19.35%Dunki n BrandsDEC '18DEC '17DEC '16DEC '15DEC '14DEC '13DEC '12 Cash and cash equivalents5181018.3361.40260.40208.10256.90252.60Total revenue1,322860.5828.9810.9748.7713.8658.0 Capital expenditures51.914.615.1730.2523.6431.122.4Cash as % of Sales39.16%118.34%43.60%32.11%27.79%35.99%38.39%Capit al expenditure as a % of Sales3.93%1.70%1.83%3.73%3.16%4.36%3.40%Whitbread (Costa Coffee)DEC '18DEC '17DEC '16DEC '15DEC '14DEC '13 Cash and cash equivalents916357.102.1041.4040.00Total revenue3,2953,106.02,921.82,608.12,294.32,030.0 Capital
  • 26. expenditures467571.2680.3518.5286.3329Cash as % of Sales2.75%2.03%1.95%0.08%1.80%1.97%Capital expenditure as a % of Sales14.17%18.39%23.28%19.88%12.48%16.21% Spread & ValuationStarbucks CorporationStarbucks CorporationSBUX 855244109 2842255 NASDAQ Common stock SBUXSource: FactSet FundamentalsSource: FactSet FundamentalsSEP '18SEP '17SEP '16SEP '15SEP '14SEP '13SEP '12SEP '11SEP '10SEP '09DEC '18DEC '17DEC '16DEC '15DEC '14DEC '13DEC '12DEC '11DEC '10DEC '09364 Days364 Days371 Days364 Days364 Days364 Days364 Days364 Days371 Days364 DaysPrice/Sales3.143.633.774.603.653.922.932.902.251.83Price /Sales3.213.513.784.583.493.962.952.451.851.51Price/Earnings 28.1718.9528.4737.0924.80584.6028.3027.5523.4531.55Price/E arnings17.5427.2628.4931.8627.747,733.0028.3323.0220.9238. 13Price/Book Value- 14.0513.9614.9810.6312.167.637.265.945.27Price/Book Value63.6214.1113.4414.8010.6913.007.446.335.244.84Price/T angible Book Value- 97.2721.7122.9816.8915.868.538.016.475.85Price/Tangible Book Value- 22.1621.6723.1413.6017.438.327.035.765.42Price/Cash Flow6.3718.2618.4122.9018.07137.1017.0425.1615.3012.33Pric e/Cash Flow6.6418.8017.5923.4194.3820.2722.4017.8011.6310.65Price /Free Cash Flow7.5628.6927.0434.6627.73- 28.5041.6721.6116.54Price/Free Cash Flow7.9629.5725.6835.89-33.5543.8426.5615.6815.68Dividend Yield (%)2.081.831.531.131.341.131.371.221.120.00Dividend Yield (%)2.221.861.481.101.381.091.341.390.890.00Enterprise Value/EBIT20.0220.0120.6524.6619.4523.5319.7216.7612.4716 .15Enterprise Value/EBIT19.4319.7920.7125.2220.0525.0520.0816.8412.9915 .30Enterprise Value/EBITDA14.6115.6916.2819.2815.3318.3114.9312.369.10 10.13Enterprise
  • 27. Value/EBITDA14.5115.5816.3719.7615.8619.3715.2212.459.36 9.77Enterprise Value/Sales2.973.443.714.323.343.652.672.161.651.54Enterpris e Value/Sales3.033.493.784.453.453.762.752.251.691.56Total Debt/Enterprise Value0.120.060.040.030.040.040.020.020.030.04Total Debt/Enterprise Value0.130.050.050.030.040.020.020.020.030.04United States / Restaurants -INDFI3435US Source: FactSet Market AggregratesCorporate Spreads USD Spread to Treasury 27 Feb '19DEC '18DEC '17DEC '16DEC '15DEC '14DEC '13DEC '12DEC '11DEC '10DEC '091 Month3 Months6 Months1 Year2 Years3 Years5 Years7 Years10 Years20 Years30 YearsPrice/Earnings21.8226.3323.1426.9422.9323.1018.9720.9 018.5817.21Consumer Non-DurablesPrice/Earnings (excl negatives)21.7125.9922.9726.6822.6022.9218.8920.7018.4616.2 1AAA----------- Price/Sales2.692.792.322.552.542.592.102.291.911.49AA18.911 8.9118.9118.1219.8925.1440.3853.0171.481.6175.311Price/Boo k Value- 152.8747.5020.3410.497.847.636.306.825.634.61A22.1317.611 5.2322.3134.6429.3267.5564.71115.71162.3895.795Price/Cash Flow12.3519.9914.5416.0418.0415.5513.3313.6312.299.83BBB 5.7829.646.8855.2171.92102.86131.69154.08172.15271.49277. 49Price/Cash Flow (excl negatives)12.3519.9914.5316.0218.0415.5513.3313.6312.279.82 BB110.75110.75110.75110.75204.293209.43214.47241.25268.1 35268.135268.135Price/Free Cash Flow17.9934.6323.9927.2538.8329.9225.4422.5819.2717.14B21 0.868210.868210.868210.868210.868210.868210.868210.86821 0.868210.868210.868Enterprise Value/EBIT19.4219.7217.8518.7716.8616.9814.0215.0913.3912 .25Consumer ServicesEnterprise Value/EBITDA14.9415.2813.4414.1812.9213.1410.9311.6910.2 39.12AAA102.729102.729102.729102.729102.729102.729102.7 29102.729102.72991.577.84Enterprise
  • 28. Value/Sales3.173.242.702.852.782.832.352.512.131.76AA106.9 51106.951106.951106.951106.951106.951106.951106.951106.9 51106.951106.951A72.5949.9327.2726.53727.6438.9976.2189.5 6112.01156.24140.84United States / Beverages: Non-Alcoholic - INDBBB244.48137.5743.6656.6564.9191.41121.32139.86167.7 3194.19194.741FI2420US BB97.4660.6652.3395.69126.54173.27175.82226.17219.15309. 28274.318Source: FactSet Market AggregratesB200.853200.853200.853183.6256.1368.57478.174 71.35323.734362.103362.103DEC '18DEC '17DEC '16DEC '15DEC '14DEC '13DEC '12DEC '11DEC '10DEC '09Retail TradePrice/Earnings33.6726.0921.7023.6020.7419.5016.8316.2 117.2817.45AAA-----------Price/Earnings (excl negatives)33.5626.0321.7023.5920.7419.5016.8316.2117.2517.4 5AA9.6489.6489.64810.3514.8627.0141.5361.7682.36119.6384. 173Price/Sales3.543.513.123.092.822.612.262.252.502.15A16.0 6416.06415.7417.6619.6222.4243.9260.2680.24126.98107.48Pri ce/Book Value7.068.937.508.275.965.724.874.555.095.48BBB1227.4963 1.937.0243.6871.475.07125.99141.33205.78226.32218.026Price /Cash Flow22.4020.5517.5816.3716.1515.1614.4914.0813.7213.25BB 129.722129.722129.722129.722166.36203.011260.578260.5785 07.616477.99448.367Price/Cash Flow (excl negatives)22.3820.5417.5816.3716.1515.1614.4914.0813.7113.2 5B648.92648.92393.65147.74157.11403.489403.489403.489580 .519580.519580.519Price/Free Cash Flow30.9327.9824.3621.6521.8520.4221.1121.4118.6319.45Ent erprise Value/EBIT21.0921.2018.9219.0117.0116.1314.2014.0914.2713 .68Enterprise Value/EBITDA17.7017.6615.6115.6513.9813.2311.6011.5311.9 311.10Enterprise Value/Sales4.103.933.533.473.152.932.582.572.712.37Or put together your own relevant peer analysis
  • 29. Store countsStarbucks Coffee Company - Store Counts by MarketYou can get additional data through Q1 2019(Updated through the period ending September 30, 2018)Licensed201820172016201520142013Q3 FY13Q2 FY13Q1 FY13Q4 FY12Q3 FY12Q2 FY12Q1 FY12Q4 FY11 Q3 FY11 Q2 FY11Q1 FY11Q4 FY10Q3 FY10Q2 FY10Q1 FY10AmericasArgentina14312410590766866646461545150393 3323024201514Aruba443333333333332222111Bahamas121210 999888899999998888Bolivia4443- 0--------Brazil118- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0Canada4093773643494623973553253023002912922912812752 73274273271267265Chile1191059379625044434241403736353 1313130303030Colombia312111102----------------Costa Rica14121174322211----------Curacao3322222111111--------El Salvador121110105544444443222---- Guatemala9775422222222211-----Jamaica6- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0Mexico708632563506434403384377368356349342338318314 304296283273268266Panama9651- 0-------- 3634323029272727Peru102918477746558565445444341363432 3029272727Puerto Rico26242319- 0-------- 3634323029272727Trinidad and Tobago751- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0United States6,0315,7085,2924,9624,6594,4084,3114,2584,2224,1894,1 074,0834,0414,0053,9423,9063,9013,8673,8473,8373,861Urugu ay3- 0- 0- 0The Americas7,7707,1466,5886,1325,7965,4155,2395,1435,0725,01 14,9054,8674,8164,7314,6434,5924,5754,5164,4774,4534,472R ate of Growth8.73%8.47%7.44%5.80%7.04%CAPAustralia423122252 424242424232222222122222222222222Brunei44432------------- ---Cambodia1472- 0- 0----------------China- 01,3961,110785544403364345325292264247239218207198194 186178177172Hong Kong/Macau193180169157147136136135135131126122122117 116112111111112112112India1281008477542416113--------
  • 30. Indonesia365317260214186161154147139133127122117109102 969085807576Japan1068672581,0601,000988985975965966955 950935925914901892886878876Malaysia268248226199175150 142141140134130125123121121119116117115116117New Zealand222325262628293030343435353535373839394141Phili ppines36032429326424021621220520720119519018818318117 6175168162163162Singapore141134- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0South Korea1,2311,108952831700559526501472467442415391367347 330323315299295295Taiwan45842039235632329729028628027 1271264255249240239232228229225226Vietnam393121151121 1-------------Total CAP3,3714,4093,6323,0103,4923,0002,8822,8112,7302,6512,57 72,4972,4422,3552,2962,2432,2022,1632,1222,1042,099Rate of Growth-23.54%21.39%20.66%- 13.80%16.40%EMEAAndorra111- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0---- ----Austria2111- 0- 0- 0- 0- 0- 0- 0- 0- 0--------Azerbaijan4441- 0- 0- 0- 0- 0- 0- 0- 0- 0-------- Bahrain292320181715151514131312111111111111111010Belgi um2521181514101099966655444443Bulgaria126555444444444 4444433Cyprus111010999999999999999999Czech Republic373026231817151514141313121212121211101010Den mark20212119158444333333222222Egypt363234302525252423 232121212222222222222222Finland88843222211---------- France10070502723181413131184333332222Germany15215616 11074333111111111111Greece312929313134343434424646525 959606060606868Hungary22171411998777766533311-- Ireland777871534029292927272825242324222222232323Jorda n232116121011111199999999999910Kazakhstan16136- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0Kuwait14211895777269696766656767676768676866676563Le banon393629272017171515161616161615141414141417Luxem bourg332- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0Monaco22211----------------Morocco111087644433332-------- Netherlands6557484541292825252320191614111088776Norwa y24231716115211111---------
  • 31. Oman1312121066666666666777777Poland69594743383433333 2292823211611997533Portugal1811111088777777777776655Q atar343016161311131212121111101010101010999Romania413 12219108888888888888887Russia125115107104876563636460 5656535250474337353129Saudi Arabia16612492716762686565646363636565676969696968Slo vakia432- 0- 0----------------South Africa1263- 0- 0--------------- - Spain14211396898682827979787675757574767675757674Swed en151618116554333311111111- Switzerland753551111111111111111Turkey4533873142602201 93190181176171169162159153147141138137132129127United Kingdom653606532414285242223211201195183172166162156 1461381351068783UAE - Dubai186164148131115107107106105999798989495959795959 493Total EMEA2,8302,4722,1191,6251,3231,1431,1091,0671,0411,01498 4950930913890868856834795769755Rate of Growth14.48%16.66%30.40%22.83%15.75%Co- operated201820172016201520142013Q3 FY13Q2 FY13Q1 FY13Q4 FY12Q3 FY12Q2 FY12Q1 FY12Q4 FY11 Q3 FY11 Q2 FY11Q1 FY11Q4 FY10Q3 FY10Q2 FY10Q1 FY10AmericasBrazil- 01081041038970595554534538322826242423232424Canada1,1 091,0831,0351,0099839409138988868748628448388308128078 03799790787785Puerto Rico- 0- 0- 0- 02019191919191919191919212121212121United States8,5758,2227,8807,5597,3037,0496,9236,8806,8696,8566,7 266,7056,6966,6976,6836,6916,6986,6996,7196,7286,760Total The Americas9,6849,4139,0198,6718,3958,0787,9147,8527,8287,80 27,6527,6067,5857,5747,5407,5437,5467,5427,5537,5607,590U S Rate of Growth4.29%4.34%4.25%3.51%3.60%CAPChina3,5211,5401,2 721,0268236145465044424083553303052782602472372202051 99193Japan1,2861,2181,1401,073- 0--------Singapore- 0-
  • 32. 012611610694888684807977767270696664656564Thailand352 31227323720317416916516315515114614414113913913713313 4133132Total CAP5,1593,0702,8112,4521,13288280375568964358555352549 1469455440417404397389China Rate of Growth128.64%21.07%23.98%24.67%34.04%EMEAAustria171 717181716141312121212121212111110101011France70737476 7872706969676664636259565454525151Germany- 0- 0- 01491521571611601591571531531541501491431441421391401 44Switzerland56575656555252515050494949464545464646464 6Netherlands1210101097433333221------United Kingdom335345366428506522531535542566569569573573574 571574568573577588Total EMEA49050252373781782683283183585585285085384584082 6829820820824840EMEA Rate of Growth-2.39%-4.02%- 29.04%-9.79%-1.09%Regional Totals201820172016201520142013 Americas Licensed 7,7707,1466,5886,1325,7965,4155,2395,1435,0725,0114,9054,8 674,8164,7314,6434,5924,5754,5164,4774,4534,472 Americas Co-operated 9,6849,4139,0198,6718,3958,0787,9147,8527,8287,8027,6527,6 067,5857,5747,5407,5437,5467,5427,5537,5607,590 (U.S. Subtotal)14,60613,93013,17212,52111,96211,45711,23411,1381 1,09111,04510,83310,78810,73710,70210,62510,59710,59910,5 6610,56610,56510,621Total Americas17,45416,55915,60714,80314,19113,49313,15312,995 12,90012,81312,55712,47312,40112,30512,18312,13512,12112, 05812,03012,01312,062 CAP Licensed3,3714,4093,6323,0103,4923,0002,8822,8112,7302,651 2,5772,4972,4422,3552,2962,2432,2022,1632,1222,1042,099 CAP Co- operated5,1593,0702,8112,4521,13288280375568964358555352 5491469455440417404397389 (Mainland China Subtotal)3,5212,9362,3821,8111,3671,017910849767700619577 544496467445431406383376365Total CAP8,5307,4796,4435,4624,6243,8823,6853,5663,4193,2943,16
  • 33. 23,0502,9672,8462,7652,6982,6422,5802,5262,5012,488 EMEA Licensed2,8302,4722,1191,6251,3231,1431,1091,0671,0411,014 984950930913890868856834795769755 EMEA Co- operated4905025237378178268328318358558528508538458408 26829820820824840 (ME Subtotal)643538436369326302310301295287285285282278279 280285281281277277Total EMEA3,3202,9742,6422,3622,1401,9691,9411,8981,8761,8691, 8361,8001,7831,7581,7301,6941,6851,6541,6151,5931,595All Other Segments 201820172016201520142013 Licensed123735414266808666768281808032732655255855854 9552 Co- operated8290358375369357350323171414161314131098889Tot al All Other Segments203273934164114234304098390969793943403365615 66566557561 Total Licensed13,98314,06412,37410,80810,6539,6249,3109,1078,90 98,7528,5488,3958,2688,0798,1568,0298,1858,0717,9527,8757, 878 Total Co- operated15,34113,27512,71112,23510,71310,1439,8999,7619,36 99,3149,1039,0258,9768,9248,8628,8348,8248,7878,7858,7898, 828Grand Total29,32427,33925,08523,04321,36619,76719,20918,86818,2 7818,06617,65117,42017,24417,00317,01816,86317,00916,8581 6,73716,66416,706Licensed Rate of Growth- 0.58%13.66%14.49%1.45%10.69%Company Oper Rate of Growth15.56%4.44%3.89%14.21%5.62%4 Restated for Austria & Switzerland acquisitionsNote:8 Restated for licensing ChileHistorical store counts have been recast for any ownership or segment reporting changes made prior to Q1 FY15. Effective in Q1 FY15, we changed our store count policy such that we will no longer recast historical store counts upon a change in ownership. These transfers will be reflected as current period activity within "net stores opened/(closed) or transferred" during the period.(1) Q1 FY18 reflects the transfer of 112
  • 34. Brazil stores from company-operated to licensed.(2) Q1 FY18 reflects the transfer of 1,477 China stores from licensed to company-operated as a result of the acquisition of East China JV on 12/31/2017.(3) Q4 FY17 reflects the transfer of all Singapore stores from company-operated to licensed.(4) Q3 FY16 reflects the transfer of all Germany stores from company- operated to licensed.(5) Q4 FY15 reflects the transfer of all Puerto Rico stores from company-operated to licensed.(6) Q1 FY15 reflects the transfer of 1,009 Japan stores from licensed to company-operated as a result of the acquisition of Starbucks Japan in the first quarter of fiscal 2015.(7) Includes Bahrain, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, UAE - Dubai (6) (6) (2, 3, 6) (2, 3, 6) (7) (5) (5) (1, 5) (4) (4) (3) (3) (4) (4) (2) (2) (1) (1) Comp SalesStarbucks Coffee CompanyHistorical Comparable Store Sales(Updated through the period ending December 30, 2018)ConsolidatedFY 01FY 02FY 03FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY 15FY 16FY 17FY 18FY 19Q-1Total10%2%9%10%10%7%6%1%-
  • 35. 9%4%7%9%6%5%5%8%3%2%4%Transaction4%4%9%9%6%6 %4%-1%-5%1%5%7%4%4%2%4%-1%0%0%Ticket6%- 2%0%1%4%1%2%2%-4%4%2%2%2%1%3%4%4%2%3%Q- 2Total6%7%7%12%7%10%4%-3%- 8%7%7%7%6%6%7%6%3%2%Transaction1%7%6%11%4%8%1 %-4%-5%3%6%6%4%3%3%2%-1%- 1%Ticket5%0%1%1%3%2%3%1%- 3%4%1%1%2%3%4%4%4%3%Q- 3Total3%8%8%11%7%6%4%-4%- 5%9%8%6%8%6%7%4%4%1%Transaction1%8%7%10%3%4%1 %-4%-4%6%6%5%7%2%4%0%0%- 2%Ticket2%0%1%1%4%2%3%0%- 2%3%2%2%1%4%3%4%4%3%Q-4Total2%8%9%9%8%5%4%- 7%- 1%8%9%6%7%5%8%4%2%3%Transaction1%8%8%8%4%4%0 %-4%-1%5%6%5%5%1%4%-1%1%- 1%Ticket1%0%1%1%4%1%4%- 3%0%2%3%1%2%4%4%5%2%4%FYTotal5%6%8%10%8%7%5 %-3%- 6%7%8%7%7%6%7%5%3%2%Transaction2%7%7%9%4%5%1 %-4%-4%4%6%6%5%3%3%1%0%-1%Ticket3%- 1%1%1%4%2%4%0%- 2%3%2%1%2%3%4%4%3%3%AmericasFY 01FY 02FY 03FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY 15FY 16FY 17FY 18FY 19Q-1Total- 10%4%7%9%7%5%5%9%3%2%4%Transaction- 5%0%5%7%4%4%2%4%-2%0%0%Ticket- 4%4%2%2%2%1%3%5%5%2%4%Q-2Total- 8%7%6%8%6%6%7%7%3%2%Transaction- 5%3%5%7%5%2%2%3%-1%0%Ticket- 3%4%1%1%2%3%5%5%4%3%Q-3Total- 6%9%8%7%9%6%8%4%5%1%Transaction- 4%6%5%5%7%2%4%0%0%-2%Ticket- 2%3%2%2%2%4%4%4%5%4%Q-4Total- 1%7%10%7%8%5%8%5%3%4%Transaction- 1%5%6%5%5%1%4%-1%1%-
  • 36. 1%Ticket0%2%3%2%3%4%5%6%2%5%FYTotal- 6%7%8%8%7%6%7%6%3%2%Transaction- 4%3%5%6%5%2%3%1%0%-1%Ticket- 2%3%2%2%2%3%4%5%4%3%U.S. FY 01FY 02FY 03FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY 15FY 16FY 17FY 18FY 19Q-1Total11%11%7%6%-1%- 10%4%8%9%7%5%5%9%3%2%4%Transaction6%6%3%-3%- 6%0%6%7%4%4%2%4%-2%0%0%Ticket5%1%3%2%- 5%4%2%1%2%1%4%5%5%2%4%Q-2Total13%7%10%3%-4%- 8%7%7%8%7%6%7%7%3%2%Transaction12%4%8%0%-5%- 5%3%6%7%5%2%2%3%-2%0%Ticket1%3%2%3%1%- 3%5%1%1%2%3%5%5%4%3%Q-3Total12%7%6%4%-5%- 6%9%8%7%9%7%8%4%5%1%Transaction11%3%5%0%-4%- 4%6%6%5%7%2%4%0%0%-3%Ticket1%4%1%4%-1%- 2%3%2%2%2%5%4%4%5%4%Q-4Total9%9%5%4%-8%- 1%8%10%7%8%5%9%4%2%4%Transaction8%4%4%-1%-5%- 1%6%7%5%5%1%4%-1%0%-1%Ticket1%5%1%5%- 3%0%2%3%2%3%4%5%6%2%5%FYTotal5%7%9%11%9%7%4 %-5%- 6%7%8%8%8%6%7%6%3%2%Transaction10%4%5%0%-4%- 4%3%6%6%5%2%3%1%-1%-1%Ticket1%5%2%4%0%- 2%4%2%2%2%3%4%5%4%3%CAPFY 01FY 02FY 03FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY 15FY 16FY 17FY 18FY 19Q- 1Total2%6%19%20%11%8%8%5%5%1%3%Transaction- 1%6%18%15%8%7%8%4%2%1%1%Ticket3%0%1%5%3%1%0 %2%3%0%2%Q- 2Total1%12%18%18%8%7%12%3%3%3%Transaction- 1%10%17%14%4%7%10%2%1%0%Ticket3%2%1%4%3%0%2 %2%1%3%Q-3Total3%11%26%12%9%7%11%3%1%- 1%Transaction1%8%24%8%8%6%10%2%0%- 3%Ticket2%2%2%4%0%1%1%1%1%2%Q- 4Total3%17%25%10%8%5%6%1%2%1%Transaction2%12%21 %7%6%6%6%0%1%-1%Ticket1%4%3%2%2%- 1%0%2%1%2%FYTotal2%11%22%15%9%7%9%3%3%1%Tran saction0%9%20%11%7%6%8%1%1%-
  • 37. 1%Ticket2%2%2%3%2%0%1%2%1%2%EMEAFY 01FY 02FY 03FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY 15FY 16FY 17FY 18FY 19Q-1Total-5%3%3%2%- 1%5%4%1%-1%-1%-1%Transaction-4%6%2%2%2%3%3%1%- 2%-4%-1%Ticket-1%-2%2%1%-3%1%1%0%1%3%0%Q-2Total- 4%4%4%-1%-2%6%2%1%-1%-1%Transaction-1%6%5%0%- 1%5%2%0%0%-4%Ticket-3%-2%-1%0%0%1%1%1%-1%3%Q- 3Total-2%5%3%0%2%3%3%- 1%2%0%Transaction1%5%3%0%5%2%2%0%0%-2%Ticket- 3%0%1%0%-3%2%1%-2%2%3%Q-4Total0%7%1%- 1%2%5%5%-1%1%2%Transaction4%5%2%0%3%2%3%0%- 2%0%Ticket-4%2%-1%-1%-1%2%3%-1%3%2%FYTotal- 3%5%3%0%0%5%4%0%1%0%Transaction0%6%3%0%2%3%2 %1%-1%-3%Ticket-3%-1%0%0%-2%2%1%0%1%3%NOTE: Includes only Starbucks company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates. HW RatiosStarbucks (SBUX)Tax rate21.83%WACC7.50%Download any other relevant data from Starbucks or its competition% ofData from Dunkin Donuts is given in the DNKN tabFiscal Year & TTM201320142015201620172018TTMTotalSales14,866.816,44 7.819,162.721,315.922,386.824,719.525,278.420182017201620 152014Company11,793.212,977.915,197.316,844.117,650.719,6 90.320,318.880.4%Beverages74%73%74%73%73%Licensed1,36 0.51,588.61,861.92,154.22,355.02,652.22,706.910.7%Food20% 20%19%19%19%CPG & Other1,713.11,881.32,103.52,317.62,381.12,377.02,252.78.9%P ackaged2%3%3%3%3%Other4%4%4%5%5%EBIT- 325.43,081.13,601.04,171.94,134.73,883.33,783.0Total100%10 0%100%100%100%NOPLAT GAAP- 254.42,408.42,814.83,261.03,231.93,035.42,957.0Adjustments to EBIT-2,784.120.20.00.0-153.5-224.4-240.0% of Total Sales20182017201620152014NOPLAT non- GAAP1,921.92,392.62,814.83,261.03,351.93,210.83,144.6Total 100.0100.0100.0100.0100.0Net
  • 38. Income8.32,068.12,757.42,817.72,884.74,518.33,028.8Americas 68.271.471.271.375.1China/Asia Pacific18.214.814.112.97.1Cash3,233.81,843.81,611.42,263.22, 690.98,937.8Channel Development9.49.29.39.39.7Total Equity4,482.35,273.75,819.85,890.75,457.01,175.8EMEA4.34.6 5.46.58.1Total Debt1,299.42,048.32,391.43,642.93,987.69,493.7Total Assets11,516.710,752.912,416.314,312.514,365.624,156.4Unite d States70.473.874.073.776.5China/Japan/UK22.120.220.020.0Inv ested Capital 5,781.77,322.08,211.29,533.69,444.610,669.5Other7.56.06.06.3 Fiscal Year & TTM201320142015201620172018TTMGrowth in Sales20182017201620152014Capital Expenditure-1,151.2- 1,160.9-1,303.7-1,440.3-1,519.4- 1,976.4Total12.05.411.616.810.0Acquisition-610.40.0- 284.30.00.0-1,311.3Americas6.95.811.311.08.9Noncash expenses655.6748.4933.81,030.11,067.11,305.9China/Asia Pacific38.110.322.7112.123.2Change in NWC734.8- 2,209.8278.8353.089.76,913.7Channel Development14.43.911.612.08.8Net Investment239.2-2,622.3- 91.1-57.2-362.66,243.2EMEA3.4-9.9-7.5-6.011.6Net Investment w/acquisition-371.2-2,622.3-375.4-57.2-362.64,931.9United States4.811.712.210.3FCF w/o acquisition-15.2- 213.92,723.73,203.82,869.39,278.6China/Japan/UK5.711.4FCF w/acquisition-625.6- 213.92,439.43,203.82,869.37,967.3Other5.85.4-68.610.9FCF non-GAAP2,161.1-229.72,723.73,203.82,989.39,454.0Operating Margin20182017201620152014Fiscal Year End201320142015201620172018Total22.2824.8125.6524.3924. 19Stock Price (Data)$38.5$37.73$56.84$54.14$53.71$56.84Americas21.6023. 4025.2924.2523.45Dividend per share (data)$0.42$0.52$0.64$0.80$1.00$1.26Channel Development40.3644.4841.7737.7836.04Shares (Basic)1,498.51,506.31,495.91,471.61,449.51,382.7China/Asia
  • 39. Pacific19.3923.6121.4920.8932.98Shares (Diluted)1,524.51,526.31,513.41,486.71,461.51,394.6EMEA5.8 711.4513.4813.829.21Market capitalization$57,677.27$56,832.70$85,026.96$79,672.42$77,8 52.65$78,592.67Enterprise Value$55,745.0$57,038.9$85,808.8$81,058.8$79,156.2$79,154. 9Q1 2019 operating marginTotal15.30%down 310 bp - non GAAP 17.4%P/E ratio6949.1x27.5x30.8x28.3x27.0x17.4xAmericas22.00%EV/ EBITDA168.8x14.9x18.9x15.6x15.2x15.3xChannel Development34.80%EV/EBITDA non- GAAP17.9x15.0x18.9x15.6x14.8x14.6xChina/Asia Pacific18.00%EMEA10.10%Calendar Year End201320142015201620172018YTDStock Price (Data)$39.20$41.03$60.03$55.52$57.43$64.40$67.09Same store sales by geographyShares (Data)1513.001,498.81,485.91,457.51,421.01,240.6$1,240.60A mericas 4% increase all due to priceMarket capitalization$59,309.6$61,495.8$89,198.6$80,920.4$81,608.0$ 79,894.6$83,231.9CAP 3% increase with 2% due to price and 1% transactions - China same store up 1% with transactions down 2%EMEA down 1% due to 1% decline in transactionsChannel Development revenue down 20% and margins down to 34.8%Fiscal Year20142015201620172018TTMAverageIndustryROIC w/goodwill36.8%36.2%36.8%34.1%30.2%34.8%20.9%ROIC w/o goodwill42.0%43.0%45.1%42.6%42.7%43.1%ROIC non- GAAP36.5%36.2%36.8%35.3%31.9%35.4%average only fiscal yearsROE42.4%49.7%48.1%50.8%136.2%65.5%- 700.6%ROA18.6%23.8%21.1%20.1%23.5%21.4%13.2%Gross Margin58.3%59.4%60.1%59.6%58.8%58.7%59.2%24.6%Operat ing Margin GAAP18.7%18.8%19.6%18.5%15.7%15.0%18.3%16.3%Operati ng Margin non- GAAP18.6%18.8%19.6%19.2%16.6%15.9%18.5%Net Margin12.6%14.4%13.2%12.9%18.3%12.0%14.3%12.3%Curren
  • 40. t Ratio1.371.091.051.252.201.39Quick Ratio1.010.730.740.931.951.07Debt/Equity0.390.410.620.738.0 72.04-3487.83Interest Coverage48.0751.0851.3144.7022.8043.597.02Debt/ EBITDA0.530.490.580.731.300.732.89Economic Profit Spread ($)$1,917.0$2,232.3$2,595.6$2,520.3$2,281.1Economic Profit Charge ($)$1,917.0$2,232.3$2,595.6$2,520.3$2,281.1As a % of Sales20142015201620172018TTMAverageCapEx7.1%6.8%6.8% 6.8%8.0%7.1%Acquisition0.0%1.5%0.0%0.0%5.3%1.4%averag e only fiscal years% Change20142015201620172018TTMAverageCAGRRevenue 10.6%16.5%11.2%5.0%10.4%2.3%10.8%10.7%Company10.0%1 7.1%10.8%4.8%11.6%3.2%10.9%10.8%Licensed16.8%17.2%15 .7%9.3%12.6%2.1%14.3%14.3%CPG9.8%11.8%10.2%2.7%- 0.2%-5.2%6.9%6.8%Same Store Sales (data)6.0%7.0%5.0%3.0%2.0%4.0%4.6%Domestic Same Store Sales (data)6.0%7.0%6.0%3.0%2.0%4.0%4.8%Operating Income GAAP846.9%16.9%15.9%-0.9%-6.1%- 2.6%174.5%264.2%average only fiscal yearsOperating Income non-GAAP24.5%17.6%15.9%2.8%-4.2%-2.1%11.3%10.8%Net Income24816.9%33.3%2.2%2.4%56.6%- 33.0%4982.3%252.5%FCF1311.8%-1373.2%17.6%- 10.4%223.4%33.8%260.9%FCF w/ acquisition65.8%- 1240.3%31.3%-10.4%177.7%-195.2%66.3%Capex 0.8%12.3%10.5%5.5%30.1%11.8%Economic Profit16.4%16.3%-2.9%-9.5%5.1%Fiscal Year % Change20142015201620172018AverageCAGRStock Price- 1.97%50.65%-4.75%-0.79%5.83%9.79%8.11%Total Return- 0.62%52.35%-3.34%1.05%8.17%11.52%9.85%Calendar Year % Change20142015201620172018YTDAverageCAGRStock Price4.7%46.3%-7.5%3.4%12.1%4.2%11.81%10.44%Total Return (data)6.2%48.2%-6.1%5.4%14.8%14.8%13.69%Industry (data)5.7%15.4%-0.3%19.8%4.94%5.38%9.11%average only calendar yearsS&P 500 Price (data & calc)11.4%- 0.8%9.5%19.4%-6.26%2.08%6.65%6.28%Moody's S&PFitchCurrent Credit Rating
  • 41. (Data)Baa1BBB+BBB+Downgraded in 2016,17,18 by each agency** Everything must be calculated or carried over from financial statements UNLESS specifically noted by the term "data"S&P 50020131848.3620182506.85 The downgrade reflects Starbucks' aggressive change in financial policy, the third material revision within the past year, with an increased commitment to return $25 billion of cash to shareholders via dividends and share repurchases over the three year period ending fiscal 2020 (September), up from $9 billion returned during the previous three years. Fitch anticipates total debt could increase by almost $10 billion by fiscal 2020 to help finance Starbucks' cash return goal given Fitch's projection of FCF before dividends of more than $8 billion over that period and roughly $5 billion of after-tax proceeds from the Nestle licensing agreement. At fiscal year-end 2017, Starbucks had $3.9 billion of total debt. (FITCH) The downgrade was prompted by Starbucks decision to materially increase debt to support returns to shareholders. Shareholder returns are now targeted at $25 billion -- up from $15 billion in November 2017 -- over the three year period from 2018 through 2020. This change in policy will be partially funded with additional debt and result in a deterioration in credit metrics that are more representative of the revised ratings. "The material increase in Starbuck's fixed shareholder return target will result in significantly higher debt levels and weaker credit metrics at a time of operating challenges" stated Moody's Senior Credit Officer Bill Fahy." We estimate that the additional debt needed to fund the proposed shareholder returns will result in leverage exceeding 2.8 times and retained cash flow to total debt of around 20%. "In addition, we remain concerned that Starbucks willingness to curtail shareholder returns in the event operating results fall short of expectations remains uncertain and could lead to a further deterioration in credit metrics," added Fahy. (MOODYS)
  • 42. GraphsCalendar Year % Change20142015201620172018YTDStock Price4.7%46.3%- 7.5%3.4%12.1%4.2%Industry5.7%15.4%- 0.3%19.8%4.94%5.38%S&P 50011.4%-0.8%9.5%19.4%- 6.26%2.08%Fiscal Year20142015201620172018TTMROIC36.8%36.2%36.8%34.1 %30.2%30.0%Operating Margin GAAP18.7%18.8%19.6%18.5%15.7%15.0%Operating Margin non-GAAP18.6%18.8%19.6%19.2%16.6%15.9%FCF1311.8%- 1373.2%17.6%-10.4%223.4%Revenue 10.6%16.5%11.2%5.0%10.4%2.3%201320142015201620172018 TTMNOPLAT- 254.42,408.42,814.83,261.03,231.93,035.42,957.0Invested Capital 5,781.77,322.08,211.29,533.69,444.610,669.512,056.520132014 2015201620172018TTMSales14866.816447.819162.721315.922 386.824719.50097625278.399951NOPLAT- 254.35246704812408.37549545732814.7610136453261.011239 32953231.93345268483035.42452848072957.023294545120142 015201620172018YTDSales growth10.6%16.5%11.2%5.0%10.4%2.3%Cost of Sales7.5%13.5%9.3%6.2%12.6%2.6%Store operating exp8.2%16.7%12.1%7.1%10.8%3.6%Other oper exp5.9%14.2%4.4%1.5%-2.6%-1.3%General oper exp5.7%20.7%13.7%2.4%26.2%2.2%Restructuring46.2%7.0%O perating expense growth7.5%15.2%10.5%7.0%12.8%2.8%Calendar Year % Change20142015201620172018YTDStock Price4.7%46.3%- 7.5%3.4%12.1%4.2%Main Competitor-11.5%- 0.1%23.1%22.9%-0.5%7.4%20142015201620172018YTDSales growth10.6%16.5%11.2%5.0%10.4%2.3%Cost of Sales7.5%13.5%9.3%6.2%12.6%2.6%Store operating exp8.2%16.7%12.1%7.1%10.8%3.6%Other oper exp5.9%14.2%4.4%1.5%-2.6%-1.3%General oper exp5.7%20.7%13.7%2.4%26.2%2.2%Restructuring46.2%7.0%O perating expense growth7.5%15.2%10.5%7.0%12.8%2.8%Same
  • 43. Store Sales (data)6.0%7.0%5.0%3.0%2.0%4.0%Operating Margin GAAP18.7%18.8%19.6%18.5%15.7%15.0% Correlation of NOPLAT & Invested Capital NOPLAT 2013 2014 2015 2016 2017 2018 TTM - 254.35246704806849 2408.3754954572905 2814.7610136450312 3261.0112393295458 3231.9334526848406 3035.4245284806821 2957.0232945450653 Invested Capital 2013 2014 2015 2016 2017 2018 TTM 5781.7000000000007 7322.0000000000009 8211.2000000000007 9533.6 9444.5999999999985 10669.499843 12056.534822589998 Correlation of Sales & NOPLAT Sales 2013 2014 2015 2016 2017 2018 TTM 14866.800000000001 16447.8 19162.7 21315.899999999998 22386.800000000003 24719.500976000003 25278.399950999999 NOPLAT 2013 2014 2015 2016 2017 2018 TTM - 254.35246704806849 2408.3754954572905 2814.7610136450312 3261.0112393295458 3231.9334526848406 3035.4245284806821 2957.0232945450653 All Screen Shots Fin 332 – Take Home Project for Starbucks The second assignment is a take home project. I will allow you
  • 44. to work in groups of two if you choose. This is not required, meaning you may work alone as well. Given this is a take home, I expect you to work as if this were an in-class exam in terms of copying and/or sharing of information. You are NOT to work with others unless they are part of your 2-person team. You will abide by Drexel’s honesty code. If for ANY reason, I suspect sharing of information, all parties will receive a “0” on the exam or possibly fail the class. You will be reported to the Dean no questions asked. No project will be accepted unless you sign off on these terms. If you delete any rows, change how I want the calculations to be constructed, change up the tabs, etc., you will lose ten points per change you make. Unfortunately, I have had too much experience with students copying in various different ways and therefore need to be VERY STRICT on this. In addition, you will be signing a full statement saying you have not in any way shared or plagiarized information. You have until Thursday, March 7th at 11:59 pm to complete the exam. If I receive your work after the required time, you will receive a “0” for your grade. Late assignments WILL NOT be accepted. I am happy to give guidance on the project but will not sit with you while you complete each part of the exam. Office hours will be held Tuesday, March 5th from 2:30-5:00 pm and Thursday March 7th from 8:00 – 9:50 AM, 12 - 3:00 pm. All work must be shown in excel (NO COPY AND PASTE VALUES unless part of forecasting) and all qualitative questions must be answered in a word document. If you choose to work in a group of two, only one excel file and one word document should be sent, with the names of your group on the email itself and the documents. Make sure you upload your work to the BBLearn icon in the week 9 folder as well as upload your word document to the turnitin icon in week 9. DO NOT give any definitions in your qualitative analysis unless specifically asked. GOOD LUCK! Our final objective is to take the information we analyzed in the
  • 45. first homework assignment and attempt to value Starbucks (SBUX) and determine if you should invest in the stock today (3/7/19). Use the excel template provided to assess any historical and forecasted data. Most of your quantitative information will come from your calculations but if you have downloaded anything, i.e. ERP, it must be sourced appropriately (screen shots are typically sufficient and should be copied directly into excel). Forecasts, if they come from research, must also be sourced in footnotes and/or bibliography. Lack of sourcing results in point deductions (including 10K). Quantitative Analysis (70 pts) 1) Fill in all highlighted items on all tabs starting with the historical data through the forecasted data (necessary items are highlighted in yellow and extra comments in blue). a. Historical Valuation & Forecast: I’d highly suggest starting with the historical part of this tab and the WACC historical values b/c they are based on actual data and do not require opinions. All historical ratios must be calculated using the data on the ROIC tab and all forecasted data should be hardcoded in (unless you are using trend analysis or another process and therefore should show your calculation in the appropriate cells). i. Income/ Balance Sheet/ CF Statement:Given ii. Historical & Forecast: This tab has both the whole Company and some breakdown of revenues. You can calculate projected sales growth either by segment, by transaction/price or by license, company revenue & other. If you simply do company/license/other, you must still have some overall breakdown by geography. This tab (with the exception of row 68 down) should all be % and ratios as noted. b. ROIC: Most values have been linked up to the Income Statement, Balance Sheet and Cash Flow Statement. Some things like the break-down of depreciation and amortization should be input based on the 10K. You must convert your forecast % to actual dollar values in this tab. Operating lease
  • 46. data is also there. Nothing hard coded in meaning everything must be linked back to the forecast tab. c. Data Given on Several Tabs: There’s no calculations needed on these tabs. It’s all historical information on SBUX, Industry, Peers, etc. d. WACC: Calculate the WACC based on market and book values. Source appropriately for this tab. For all yellow highlights, you should either calculate a value or link to data. You may adjust things like the risk-free rate or beta according to your predictions and/or the industry numbers given. It’s your choice which WACC (meaning MV vs BV) to use in your DCF. e. Operating Lease: You have a sample of this calculation on the excel worksheet we used in the online class. Fill in necessary data and calculations. Either create a separate DCF or simply adjust the current DCF for operating leases as it is a more conservative way to value. Assume current year PV, debt, etc. applies both historically and forecasted for simplicity. f. DCF: Calculate all yellow highlights or link data up to your ROIC tab for values already calculated. Calculate a sensitivity analysis for your exit multiple, growth rate and WACC. The spread to EV/EBITDA, WACC, and growth should reflect the historical volatility of these numbers and/or your view of things going forward. g. Fill in all remaining values on the excel template and calculate your equity value. Based on this calculation, should you buy, sell or hold WEN stock. h. Extra credit: Create best, base and worst-case scenarios, calculating the overall expected value. You’ll need three DCF’s to complete this as extra credit only – it is not required. Once you’ve completed your base case, simply make copies for the other outcomes and then change your forecasts directly in the DCF. You have to change multiple variables, explain your changes and calculate an overall expected value to receive extra credit. Qualitative Assessment in a WORD document (30 pts)
  • 47. 1) Start your paper with a buy, sell or hold recommendation stating the level of valuation as compared to the current market price as of 3/7/19. Include both the current and forecasted growth strategy of SBUX and how these plans have been incorporated into your forecasts. This should incorporate both domestic, international & franchise plans. (approximately 1 page) a. You do NOT need to reiterate what you already wrote in your homework assignment b. How aggressive/conservative were you in your predictions and how did this impact your overall decision. 2) OUTLINE FORMAT: Explain the inputs into your DCF model. When I say “explain” I do not want a reiteration of the number or the formula but rather what determined the number in your analysis. You must support your thought process and cannot just look at the history of the company and assume that will continue. Bullet points should be used. Do not write up a paper for this section. a. Revenue growth, gross and operating profit margin projections over the 2019-2023-time frame. Even if you read an analyst report you still need to explain what is behind their evaluation of SBUX growth. Did you include the economy in your projections? Also include if your forecasts include things like restructuring and impairment costs. Include your assessment of segments, price, transaction, etc. b. Terminal growth rate, ROIC and Exit multiple, you used in the continuing value. c. Invested capital projections – include your assessment of NWC accounts (meaning what was behind your thoughts on how you came up with your forecasted values), PP&E and intangible assets. d. WACC used and how you chose your inputs of Beta, Risk free rate, Risk premium, MV or BV.
  • 48. Based upon our forecasts for P&G, we have placed a HOLD rating on the stock given its current trading levels. Using the Exit Multiple, Key Driver, and FCF approaches we have projected a stock price for P&G in the $82 to $83 range indicating approximately a 5-6% drop in price from its current closing price of $87.25. The most recent Q3 earnings call for PG did not meet our expectations. The company is still facing headwinds primarily due to foreign currency and competition. Sales in Q3 were slightly down (-1%) year-over-year, reflecting yet another quarter of negative revenue growth as P&G is restructuring its business to focus on key markets and sheds less profitable product categories. The divesture of 41 beauty brands to Coty Inc., which was completed in October 2016, negatively impacted overall revenue growth by 2 percentage points. However, the strongest negative contributor to revenue growth in the quarter was the Grooming segment, which presented a 6% drag on overall revenue growth due to unfavorable product mix (-4%) and challenging pricing (-2%). A bright spot was the Health Care segment, which contributed 4% to net sales growth, driven by higher volumes. The results of Q3 are incorporated in our TTM, which has been a large determinant of our estimated sales growth for fiscal 2017. As noted from PG’s CFO, a good year for PG is between 1-3% all-in sales growth and a great year 3-5% all-in sales growth. In terms of their current strategy, product innovation and repeat customers are key for PG’s developed markets especially the U.S. PG forecasted “organic sales growth for its U.S. market to be about 2% for the first half of FY 2017”[footnoteRef:1]. Internationally, PG sees China as its biggest opportunity with their growth drivers set on “premiumization of our brands, digital execution, transforming our Go-To Market, and dedicated category- customer organization”[footnoteRef:2]. [1: PG CAGNY 2017 Presentation] [2: PG 2016 Analyst Day Presentation]
  • 49. In PG’s FY 2017 guidance, foreign currency is expected to be “2-3% drag on the company’s all-in sales growth resulting in their expectation for FY 2017 to be flat”[footnoteRef:3]. We feel foreign currency is going to continue to be a headwind for PG due to the outlook of rising U.S. interest rates driving the strength of the USD. Internationally, China has become a concern due to PG losing market share in the country “primarily driven to the Baby Category”[footnoteRef:4]. Political unrest in Brazil and Venezuela along with trouble in economies that are dependent on oil make us feel international sales growth will still be a challenge. Analyst research has reflected closer to 2- 3% growth per year based on the full restructuring succeeding & emerging market pickup. We forecast PG can remain flat in ’17 and adjusted down our future estimates due to foreign currency (as US interest rates are expected to continue to rise), softness internationally in sales, and industry /population growth trends. Our estimates are .40% in ‘17, 1.4% in ‘18, 1.9% in ‘19, 2.3% in ‘20, 2.7% in ‘21. (see segment for more detail) [3: PG Q3 2017 Earnings Presentation] [4: PG Q3 2017 Earnings Transcript] Our sensitivity analysis most definitely had an impact on our investment decision, particularly when looking at WACC vs Growth. When WACC was above 6.5%, our decision would have changed from “Hold” to “Sell” in all growth cases. When WACC was 5.3% our decision would have changed from “Hold” to “Buy” in all growth cases. As we see more upside risk in WACC give current economic conditions, we stayed in the “Hold” camp unless the EV/EBITDA multiple dropped below 12.70 then we would have placed a “Sell” rating on PG. The EV/EBITDA multiple we chose was 13.2 implying a 2% growth rate. In comparison to Colgate-Palmolive which our
  • 50. speaker described as PG’s closest competitor, our 13.2 multiple is more conservative than Colgate’s multiple of 15.98. We feel 13.2 is a realistic assumption due to PG’s 5-year average being 13.21 and 13.2 being slightly in the middle between its median level EV/EBITDA multiple of 12.03 and it’s all time high of 14.28. This multiple also implied growth between 1.5-2% terminal growth which is in line with our assumptions. Outline Format: A. · Tax rate - We researched the historical tax rate and observed slight increases from 22% in 2011 to 25% in 2016. We feel tax reform by the Trump administration is ways away from becoming legislation due to political gridlock; therefore, we decided to keep the effective tax rate constant at 25% to keep the forecasting consistent with future years. · Sales Segment Growth- The sales segment growth was based off our trailing twelve month assessments. We forecast growth rates to remain the same in FY ‘17, for each segment to keep results slightly above flat. For the future years, we see Fabric generally increasing about a .5% to 1% due to increased market penetration of fabric enhancers and beads. We see health care continuing to excel at a nice pace with growth plateauing at 4.5% based in industry expectations. We see the bleeding in Grooming stop in FY ‘20 and return to growth as the product pipeline is strong, which is slightly pessimistic to analysts who view Grooming returning to growth in FY ‘19. (Factset). We see Beauty marginally increasing each year plateauing at 2% in FY ‘19 due to stabilization from brand divestitures as part of the COTY deal. Beauty worldwide has been strong as evidenced by the international sales in this segment. We also see pricing power in this segment as the products remaining have stong brand loyalty and units sold are strong. Finally, for Baby, Feminine, & Family, we view this segment returning to growth in FY ’18 and plateauing at 2.5% in FY ‘20; however, we are
  • 51. nowhere near as optimistic as analysts “2.71% in FY ‘18” due to concerns with China as we mentioned in the Baby Category. · Gross Margin and Operating Margin - PG went through large restructuring changes previously, but now that those changes appear to be finished (we adjusted past years to see actual margins wo these costs), we don’t predict more restructuring in their future. We also didn’t assume impairments as well. All other operating expenses we assumed in our forecasts. However, PG has announced that they will be implementing a new “$10 billion productivity and supply chain program from 2017 to 2021”[footnoteRef:5]. This new program is meant to streamline supply networks across the United States and create a more direct way to link PG to their customers. Because of this and analyst research, we see gross margins and operating margins increasing to 52.55% and 24.75% by FY ‘21. We aren’t nearly as optimistic due to foreign currency concerns driving up costs internationally and increased R&D spending incurred so the company can continue to innovate to improve sales growth. We forecast gross margins increasing .25%-.5% each year to 51.25% and Operating margins rising .2%-.5% to 24.2% by FY ‘21. We also see the higher margin healthcare and beauty division driving some of this growth now that the product line has been paired down. [5: PG 2016 Annual Report] · Growth rate- We presumed a 2% long term growth rate for PG. Historically the U.S. economy has been growing at about 2- 2.5% and we don’t see PG being able to outperform the U.S. economy. Also, PG reported weakness internationally as we mentioned earlier in our report; therefore, we are being moderately conservative with a 2% terminal growth rate. This also aligns with industry research as consumer staples will tend to grow with GDP are not very volatile to economic trends. · ROIC- Our terminal ROIC projection is 12.4%. We see NOPLAT rising slightly $400M each year offset $3 billion of increased capital needs; thus, causing ROIC to grind slowly up to 12.4%. This estimation is slightly higher than the PG’s 6 year
  • 52. average ROIC of 11.07%. still pretty conservative as the restructuring is showing signs of success thus returning the Company to higher ROI. · EV/EBITDA multiple- Our estimation for this multiple was 13.2. We determined this was by looking at the average EV/EBITDA ratios and its closest competitors. Terry from PG mentioned Colgate- Palmolive as a close competitor with a EV/EBITDA of 15.98; however, we feel this is too high because PG’s multiple has never reached 15.98 historically. We chose 13.2 because it’s a more appropriate near PG’s 5-year average of 13.21 and given the restructuring is almost complete, we feel this is in line with the future growth of the firm. · Operating Cash - For Operating cash as % of revenues we chose 5% because it closest to the industry standard of cash as percentage of revenues excluding PG. PG is a bit of an outlier with their cash being historically about 8.95% on a 5-year average. · Goodwill - We projected to be flat for the foreseeable future due to the fact their last major acquisition was Gillette in 2005. · Capex- We estimated capital expenditures to stay approximately 5%-6% of sales. Historically and as mentioned in PG’s FY ‘17 presentation CAPEX is “expected between about 5%-5.5% of sales.”[footnoteRef:6] [6: PG Q3 2017 Earnings Presentation] · PP&E and NWC- We see PP&E ramping up from 31% in ‘17 to 35% in ‘21 as the firm continues to expand overseas. As the restructuring is stated to end next year, NWC needs will increase due to restructuring being over and the company needed new equipment as well for growth and as part of their planned supply chain overall. · Intangible Assets- We estimate intangibles to incrementally return to their historical average of 38.5% as NWC needs increase due to restructuring ending. · DSO-We estimate that our DSO ratio slightly increases in our forecasting years returning to average levels of 27 days in 2021.
  • 53. We attribute the prior years due to declining sales and divesting brands equating to less accounts receivable. · DIO- We forecast DIO increasing back to normal averages of 58 by 2021. We attribute the precipitous drop in inventory from 2014 to 2015 that stayed consistent in 2016 due to divesting businesses. We see inventory picking back for our future expected sales growth forecasts. · DPO-Our DPO ratio shows our accounts payable decreasing steadily to the 5-year average of 80 by 2021. FY 2016’s DPO of 100 days appears to be an outlier when looking at the company’s historical operating cycle. DPO was 100 days just once in 2016 out of the past 15 years of historical data. Much of this was due to their restructuring efforts and with the Company returning to more efficiency overall, this will improve DSO, DIO and DPO Sources: http://www.snl.com/interactive/newlookandfeel/4004124/CAGN Y2017Handout.pdf http://www.pginvestor.com/Cache/1001223393.PDF?O=PDF&T =&Y=&D=&FID=1001223393&iid=4004124 http://www.pginvestor.com/Cache/1001216941.PDF?O=PDF&T =&Y=&D=&FID=1001216941&iid=4004124 https://seekingalpha.com/article/4065580-procter-and-gamble- pg-q3-2017-results-earnings-call-transcript?page=1 http://www.pginvestor.com/Cache/1500090608.PDF?O=PDF&T =&Y=&D=&FID=1500090608&iid=4004124