07-02-2021, 01:52 PM
SBUX is trading at 38X 2021 estimates of $2.99 and 31X 2022 estimates of $3.60 compared with a historical PE of around 30.
However, it's beaten estimates by at least 10% in each of the last three quarters.
My guess is that with the pandemic on the downswing and the economy on track to fully reopen, those earnings estimates will prove too low.
I do agree that the company has piled on debt in recent years to boost the stock returns, so that is a bit of a concern.
On a valuation basis, it looks a bit overvalued on current numbers, but not outlandishly so if you expect continued economic recovery.
However, it's beaten estimates by at least 10% in each of the last three quarters.
My guess is that with the pandemic on the downswing and the economy on track to fully reopen, those earnings estimates will prove too low.
I do agree that the company has piled on debt in recent years to boost the stock returns, so that is a bit of a concern.
On a valuation basis, it looks a bit overvalued on current numbers, but not outlandishly so if you expect continued economic recovery.