Starbucks median PE over the last 10 years is 36.1 and over the last 5 years it is 28.3. Thus from a PE view point - the price is not out of line esp. given sbux's opportunity in expanding internationally. For perspective SBUX market cap is 39 billion and MCD's market cap is 98.3 billion.
>On a discounted cash flow basis SBUX is over-valued.
On earning justified basis - sbux continues to deliver earnings - therefore justifying its valuation. It is however priced to perfection (but not outrageously so) and if there is a stumble the stock can quickly go down 10 to 20% (which would be a buy in opinion). As long as SBUX continues to deliver it will be chased by momentum investors. The stock could go up another 10 - 20% based on earnings justified momentum.
(click on chart to expand)
As shown below SBUX continues to trade well within its p/e, p/s, p/b ranges so the value is justified.
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