Today we're going to take a look at the well-established Starbucks Corporation (NASDAQ:SBUX). The company's stock received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Starbucks’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Starbucks

What's The Opportunity In Starbucks?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 8.6% below our intrinsic value, which means if you buy Starbucks today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $116.47, then there’s not much of an upside to gain from mispricing. In addition to this, Starbucks has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Starbucks generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Starbucks' earnings over the next few years are expected to increase by 47%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in SBUX’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on SBUX, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Starbucks, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Starbucks (1 is potentially serious) you should be familiar with.

If you are no longer interested in Starbucks, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.