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May 09, 2023

Starbucks Revenue Growth: 14.8% (High Case) and 9.6% (Low Case) Profit Margin and dividend payout ratio remain the same level as it was in 2015. At 2015 Year End, Starbucks is traded at $ 56.84 The beta for Starbucks is 0.76. assume risk free rate is 2% and market risk premium of 7% What is the stock price based on the information given above?

1) Using comparable P/E and P/B calculate the Starbucks stock price?

2) Using two-stage dividend growth model determine the Starbucks stock price.

a. What is your growth rate for the first period?

b. What is your growth rate for the second (forever) period?

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