A Look At Starbucks (SBUX) Valuation As Recent Momentum Contrasts With Longer Term Returns

Recent performance snapshot and what it means for investors

Without a single clear news catalyst, Starbucks (SBUX) has still given investors plenty to think about, with a mixed return profile across different periods and sizeable operations anchored in the United States and China.

See our latest analysis for Starbucks.

Starbucks shares trade at $90.43, with a 90 day share price return of 7.39% and a 1 year total shareholder return decline of 6.52%, suggesting recent momentum has picked up after weaker longer term outcomes.

If Starbucks has you thinking about where consumer trends might head next, it could be worth scanning for other growth stories in beverage and retail as a starting point, including 20 top founder-led companies

With Starbucks generating US$37.7b in revenue and US$1.4b in net income, yet carrying a 5 year total return decline of 10.39%, investors are left wondering: is this a reset level to buy into, or is the market already pricing in future growth?

Most Popular Narrative: 7.3% Undervalued

According to the widely followed narrative by StjepanK, Starbucks shares at $90.43 sit below an assessed fair value of $97.59, with that view built on detailed assumptions about growth, margins, and capital allocation.

Starbucks''s opportunities and risks balance each other out, so the company will most likely stay put through this decade. Rising Coffee Prices and Cost Pressures The coffee industry has faced considerable cost inflation as coffee bean prices surged due to supply chain disruptions and climate-related production issues. As of March 12, 2025, the price of coffee has surged over 100% year over year.

Read the complete narrative.

Want to see what sits behind that fair value figure? The narrative leans on specific revenue paths, margin bands, and a future earnings multiple that shapes the end price.

Result: Fair Value of $97.59 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising coffee costs and renewed union pressure could squeeze Starbucks margins and challenge the idea that today’s share price is below fair value.

Find out about the key risks to this Starbucks narrative.

Another view on what the current price implies

While StjepanK’s work points to fair value of $97.59 and a 7.3% undervaluation, the current P/E of 75.3x tells a very different story. That is far above the US Hospitality average of 21.2x, peers at 37.6x, and even a fair ratio estimate of 50.1x. This suggests valuation risk if sentiment cools.

For a clearer sense of how much optimism is already baked into the current multiple, and how that compares to other names, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment on Starbucks split between opportunity and caution, consider promptly reviewing the underlying data yourself and weighing both sides of the story using 1 key reward and 5 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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