Starbucks and Peer Ratio Analysis

During lecture, we had several breakout sessions whereas we analyzed Starbucks’ Balance Sheet, Income Statement, and Financial Ratios. Using the Ratios downloaded, you’ll select your own “Peer Group” of companies in order to formulate a financial analysis and answer the following questions below.

A) What companies did you consider for your Peer Group? Which companies did you finally select?

B) Why did you select those companies and not others?

C) Using a chart table, compare the most recent year’s ratios between Starbucks ratios to its competitor companies (the ones you selected for your Peer Group). A list of required ratios and a template chart are included in the excel resource, but include the following: Liquidity (Quick, Current, Debt-Equity); Asset Management (Asset Turnover, Receivables Turnover, Inventory Turnover); Profitability (ROA, ROE, ROI, EBITDA, Tax Rate); and Per Share (Cash Flow per Share).

D) Based on your findings, where do you see Starbucks’ outperforming its competitors? Underperforming? What led you to these conclusions?

PART 3 Starbucks & Peer Stock Valuation

A) Using the Peer Group from above, prepare a chart table comparing Starbucks’ Price using a Benchmark method.

B) Calculate the Current Value of the companies (price per share x shares outstanding)

C) What do you believe is the appropriate PE and predicted EPS for the companies? Why did you select these PE and EPS numbers?

D) Calculate the Future Value of the companies based on (C) above.

E) Based on your findings would you purchase Starbucks shares? Why or why not?