Company DCF analysis file
Starbucks DCF Analysis
Starbucks’s DCF needs a store-cost and ownership case before it needs a terminal growth assumption. Company-operated sales, licensed receipts and equity-investee earnings create different profit and funding exposures. The annual basis below connects store expense, restructuring, lease cash and reinvestment so a change in reported revenue mix is not mistaken for an equal change in shareholder cash.
Compare store costs with the complete annual revenue base
Fiscal years ended September 29, 2024 and September 28, 2025; consolidated company. Amounts use the monetary scale stated in each table caption. Source: annual financial statements. Reported lines retain the issuer’s scope; derived ratios use the displayed denominators.
| Measure | FY2024 | FY2025 |
|---|---|---|
| Revenue | 36,176.2 | 37,184.4 |
| Product / distribution costs | 11,180.6 | 11,658.2 |
| Store operating expense | 15,286.5 | 17,058.9 |
| Other operating expense | 565.6 | 584.6 |
| Depreciation / amortization expense | 1,512.6 | 1,684.7 |
| General / administrative | 2,523.3 | 2,617.2 |
| Restructuring / impairment | 0 | 892 |
| Total operating expenses | 31,068.6 | 34,495.6 |
| Equity-investee income | 301.2 | 247.8 |
| Operating income | 5,408.8 | 2,936.6 |
| Consolidated net earnings | 3,762.3 | 1,856.7 |
| Parent net earnings | 3,760.9 | 1,856.4 |
| Operating margin: derived | 15.0% | 7.9% |
The income bridge includes equity-investee income in operating profit; revenue less operating expenses alone is incomplete. Parent earnings also differ slightly from consolidated earnings because of noncontrolling interests. Keep those populations consistent when moving from consolidated operations to the common-share claim.
Store labor, occupancy and support must follow the assumed ownership and service model. A restructuring adjustment needs a dated explanation of remaining cash charges and the resulting store base. Removing an impairment expense does not itself reduce lease payments or the investment needed by retained locations.
Separate operated-store revenue from licensed receipts
The annual income statement reports the following revenue populations. Licensed receipts are Starbucks revenue, not total sales made by licensed stores.
| Population | Revenue |
|---|---|
| Company operated | 30,744.8 |
| Licensed | 4,350.4 |
| Other | 2,089.2 |
| Consolidated | 37,184.4 |
Model operated stores with their direct cost and reinvestment needs; model licensed receipts with the support and contract economics that earn them. A shift between those populations changes the consolidated revenue denominator. It should not be evaluated as if every removed dollar of store sales also removed a dollar of group economic contribution.
Trace earnings into cash and reinvestment
Reconciliation source: annual earnings and cash-flow statements. Subtotals below are checkpoints, not extra amounts to add. Grouped adjustments are calculated from the disclosed cash-flow lines.
| Step | FY2025 |
|---|---|
| Operating income | 2,936.6 |
| Interest / other income | 113.3 |
| Interest expense | -542.6 |
| Income tax | -650.6 |
| Consolidated net earnings: subtotal | 1,856.7 |
| Cash-statement depreciation / amortization | 1,771.5 |
| Other reconciliation adjustments | 2,613.7 |
| Operating asset / liability changes | -1,494.4 |
| Operating cash: subtotal | 4,747.5 |
| Property / equipment additions | -2,305.5 |
| Cash after these additions: derived | 2,442 |
Other reconciliation combines deferred tax, equity-investee earnings and distributions, share compensation, non-cash lease expense, asset charges and other items. The operating-balance group includes lease liabilities as well as receivables, inventory, tax and payables. Lease expense and lease cash must stay consistent; neither group can be described entirely as ordinary store working capital.
Cash-statement depreciation and amortization has a different allocation scope from the operating-expense line above. Use the cash statement’s reconciliation rather than adding that income-statement line a second time. The $2,442.0 million residual precedes other investing and financing flows and does not establish unlevered or common-equity free cash by itself.
Stress store expense without assuming a revenue response
Illustration: raise annual store operating expense by 1%, with revenue, other costs and equity-investee income fixed. This is a cost sensitivity, not a forecast of wage growth, service improvements or customer traffic.
| Measure | Historical basis | Illustrative case |
|---|---|---|
| Store operating expense | 17,058.9 | 17,229.5 |
| Operating income | 2,936.6 | 2,766.0 |
The exact pre-tax earnings reduction is $170.589 million; table amounts are rounded to one decimal. A forecast that expects better service or traffic must specify its revenue benefit separately. Cash collection, taxes, store investment and lease commitments then follow that operating case.
Keep interim reporting separate from the annual basis
Q3 FY2026 covers 2026-03-30 through 2026-06-28 and was released 2026-07-29. Revenue was $9,322.7 million in this quarter. Source: official Q3 FY2026 results.
The later quarter reflects a changed China ownership perimeter. Its revenue and international margin cannot be read as a like-for-like continuation of the annual operated-store base. Lower investment cash can improve a period’s residual while also reflecting a different ownership footprint; reconcile both effects before extrapolating store economics.
Turn the financial basis into a DCF case
| Decision | Treatment |
|---|---|
| Revenue | Separate operated-store demand, licensed receipts and the ownership perimeter. |
| Store costs | Link labor, occupancy and product cost to the store and service case; justify any restructuring normalization. |
| Cash conversion | Reconcile inventory, collections, tax, investee distributions and lease cash without double counting. |
| Reinvestment | Fund retained and new stores consistently with the assumed ownership model. |
| Equity bridge | Reconcile financing, leases, noncontrolling claims, available cash and dilution at the valuation date. |
An enterprise forecast should state its lease convention and operating tax basis before discounting. Starting from reported CFO requires a financing and tax reconciliation; starting from operating profit requires consistent non-cash, lease, funding and investment schedules. The terminal store margin must include the maintenance and service cost needed to sustain the assumed customer proposition.
The Starbucks company analysis explains the wider operating context. Use the company forecast tool and DCF calculator with explicit assumptions. Use the historical financials to define an explicit operating and reinvestment case, then supply valuation-date capital costs, claims and diluted shares. Check that each cash claim is counted once before deriving a per-share value.
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