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Starbucks Module 2

Starbucks Module 2. Adrian Serles. Step One. Select Summary Performance Measures EPAT FCF EBITDA . Step 2. Select Comparable Companies Panera Bread Einstein Noah Chipotle. Step 3. Compute the Market Multiple - EPAT. Step 3. Compute the Market Multiple – FCF. Step 3.

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Starbucks Module 2

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  1. StarbucksModule 2 Adrian Serles

  2. Step One • Select Summary Performance Measures • EPAT • FCF • EBITDA

  3. Step 2 • Select Comparable Companies • Panera Bread • Einstein Noah • Chipotle

  4. Step 3 • Compute the Market Multiple - EPAT

  5. Step 3 • Compute the Market Multiple – FCF

  6. Step 3 • Compute the Market Multiple – EBITDA

  7. Step 4 • Compute Target Company’s Value Using Multiples - EPAT

  8. Step 4 • Compute Target Company’s Value Using Multiples - FCF

  9. Step 4 • Compute Target Company’s Value Using Multiples - EBITDA

  10. Step 5 • Compute Equity Value per Share - EPAT

  11. Step 5 • Compute Equity Value per Share - FCF

  12. Step 5 • Compute Equity Value per Share - EBITDA

  13. Analysis - EPAT • Buy • The EPAT multiple suggests the shares are undervalue by the market

  14. Analysis - FCF • Buy • The FCF multiple suggests the shares are undervalue by the market

  15. Analysis - EBITDA • Buy • The EBITDA multiple suggests the shares are undervalue by the market

  16. Conclusion • Based solely on the multiples method, Starbucks Corp. Equity seems to be undervalued in the market, suggesting a “buy” decision in all three analyses. • However, the multiples method is NOT the best method to be used in determining whether to “buy, hold or sell.”

  17. Conclusion • Why? • Selecting comparables could be difficult. • Assuming the comparables are fairly valued but, the target company is not. • Value is based on individual earnings measures rather than the company as a whole.

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