At today's price, Starbucks's stock is pricing in about 18.1% annual free-cash-flow growth for the next ten years. Over the past five years, the company's actual FCF shrank at -14.3% a year, and revenue grew just 6.4% a year — both far below what the price now requires.
At its current price, SBUX implies ~18.1% annual FCF growth for the next 10 years, discounted at 10%.
Starbucks's actual 5-year FCF growth was -14.3% a year — it shrank, not grew.
Required growth vs. historical growth
Required growth from the reverse DCF below. Historical CAGRs computed directly from 10-K FY2021–FY2025 income and cash flow statements. FCF actually declined over the period, so its bar is shown as a stub rather than a proportional fill.
Sensitivity: what if the discount rate moves?
| WACC | Required growth |
|---|---|
| 8% | 13.2% |
| 10% (base case) | 18.1% |
| 12% | 22.4% |
Even at the lowest discount rate tested (8%), the required growth rate (13.2%) is still roughly twice Starbucks's 5-year revenue CAGR (6.4%).
What would move this number
- Using FY2025's standalone FCF ($2.44B) instead of the 3-year average ($3.15B) pushes the required growth rate even higher, to 21.6% at a 10% discount rate — FY2025's FCF was already depressed by the Q4 restructuring charge, so the market is effectively betting on a strong rebound from an already-low base.
- Raising the discount rate to a more conservative 12% pushes the required growth rate to 22.4% — an unusually high bar for a large, well-known consumer brand.
- Changing the terminal growth rate (2.5%) or the 10-year projection window would shift every number in this analysis; all figures here rest on that single set of model assumptions.
Show your work
Inputs, sources, model assumptions, and the calculation
- Share price$107.08 — stockanalysis.com, Aug 21, 2026 close
- Market cap$122.05B — stockanalysis.com, Aug 21, 2026
- Total debt$16.0748B — 10-K FY2025 balance sheet (Sep 28, 2025)
- Cash and equivalents$3.2198B — 10-K FY2025 balance sheet
- Net debt$12.855B — calculated
- Enterprise value$134.91B — market cap + net debt
- Base FCF (3-year average, FY2023-2025)$3.1451B ($3.6751B + $3.3181B + $2.442B, averaged)
- Discount rate (WACC)10% base case (8%/12% tested)
- Terminal growth rate2.5% — long-run GDP-level assumption
Normalization note: FY2025 FCF ($2.44B) is 22.4% below the three-year average ($3.15B) — short of the ±40% normalization threshold, but given the clear cause (an $892M one-time Q4 restructuring charge), the 3-year average was used as the base rather than FY2025 alone.
Model: free cash flow is assumed to grow at a constant annual rate g for 10 years, then at a 2.5% terminal rate thereafter, solved by bisection for the value of g that equates present value to today's enterprise value ($134.91B).
FCF definition: operating cash flow minus capital expenditures, computed directly from each year's 10-K cash flow statement.
The fine print
- This isn't a fair-value price target — it only shows what the current price already assumes.
- Change the discount rate, the FCF base year, the projection window, or the terminal growth rate, and the answer moves — see the sensitivity table above.
- A reverse DCF shows what the market currently expects — it does not say what the stock is "worth."
- Whether 18.1% growth is realistic depends on whether the "Back to Starbucks" turnaround is structural and durable, not on this math alone.
- Any investment decision, and its outcome, is your own responsibility.
Frequently asked questions
What growth rate does SBUX's stock price assume?
At today's price, Starbucks's stock is pricing in about 18.1% annual free-cash-flow growth for the next ten years, at a 10% discount rate using a 3-year-average FCF base.
How does that compare to Starbucks's actual growth?
Starbucks's actual FCF shrank at -14.3% a year over the past five years (FY2021-FY2025), and revenue grew just 6.4% a year — both dramatically below the 18.1% the current price requires.
What share price was used for this analysis?
This analysis used $107.08, as of the Aug 21, 2026 close.