Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Starbucks Corp. (NASDAQ:SBUX)

Capital Asset Pricing Model (CAPM)

Intermediate level

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Starbucks Corp.’s common stock.


Rates of Return

Starbucks Corp., monthly rates of return

Microsoft Excel LibreOffice Calc
Starbucks Corp. (SBUX) Standard & Poor’s 500 (S&P 500)
t Date PriceSBUX,t1 DividendSBUX,t1 RSBUX,t2 PriceS&P 500,t RS&P 500,t3
Oct 31, 2014 $37.78 2,018.05
1. Nov 30, 2014 $40.61 $0.16 7.91% 2,067.56 2.45%
2. Dec 31, 2014 $41.03 1.03% 2,058.90 -0.42%
3. Jan 31, 2015 $43.77 6.68% 1,994.99 -3.10%
. . . . . . .
. . . . . . .
. . . . . . .
70. Aug 31, 2020 $84.47 $0.41 10.91% 3,500.31 7.01%
71. Sep 30, 2020 $85.92 1.72% 3,363.00 -3.92%
Average (R): 1.49% 0.81%
Standard deviation: 6.02% 4.16%
Starbucks Corp. (SBUX) Standard & Poor’s 500 (S&P 500)
t Date PriceSBUX,t1 DividendSBUX,t1 RSBUX,t2 PriceS&P 500,t RS&P 500,t3
Oct 31, 2014 $37.78 2,018.05
1. Nov 30, 2014 $40.61 $0.16 7.91% 2,067.56 2.45%
2. Dec 31, 2014 $41.03 1.03% 2,058.90 -0.42%
3. Jan 31, 2015 $43.77 6.68% 1,994.99 -3.10%
4. Feb 28, 2015 $46.75 $0.16 7.17% 2,104.50 5.49%
5. Mar 31, 2015 $47.35 1.28% 2,067.89 -1.74%
6. Apr 30, 2015 $49.58 4.71% 2,085.51 0.85%
7. May 31, 2015 $51.96 $0.16 5.12% 2,107.39 1.05%
8. Jun 30, 2015 $53.62 3.19% 2,063.11 -2.10%
9. Jul 31, 2015 $57.93 8.04% 2,103.84 1.97%
10. Aug 31, 2015 $54.71 $0.16 -5.28% 1,972.18 -6.26%
11. Sep 30, 2015 $56.84 3.89% 1,920.03 -2.64%
12. Oct 31, 2015 $62.57 10.08% 2,079.36 8.30%
13. Nov 30, 2015 $61.39 $0.20 -1.57% 2,080.41 0.05%
14. Dec 31, 2015 $60.03 -2.22% 2,043.94 -1.75%
15. Jan 31, 2016 $60.77 1.23% 1,940.24 -5.07%
16. Feb 29, 2016 $58.21 $0.20 -3.88% 1,932.23 -0.41%
17. Mar 31, 2016 $59.70 2.56% 2,059.74 6.60%
18. Apr 30, 2016 $56.23 -5.81% 2,065.30 0.27%
19. May 31, 2016 $54.89 $0.20 -2.03% 2,096.95 1.53%
20. Jun 30, 2016 $57.12 4.06% 2,098.86 0.09%
21. Jul 31, 2016 $58.05 1.63% 2,173.60 3.56%
22. Aug 31, 2016 $56.23 $0.20 -2.79% 2,170.95 -0.12%
23. Sep 30, 2016 $54.14 -3.72% 2,168.27 -0.12%
24. Oct 31, 2016 $53.07 -1.98% 2,126.15 -1.94%
25. Nov 30, 2016 $57.97 $0.25 9.70% 2,198.81 3.42%
26. Dec 31, 2016 $55.52 -4.23% 2,238.83 1.82%
27. Jan 31, 2017 $55.22 -0.54% 2,278.87 1.79%
28. Feb 28, 2017 $56.87 $0.25 3.44% 2,363.64 3.72%
29. Mar 31, 2017 $58.39 2.67% 2,362.72 -0.04%
30. Apr 30, 2017 $60.06 2.86% 2,384.20 0.91%
31. May 31, 2017 $63.61 $0.25 6.33% 2,411.80 1.16%
32. Jun 30, 2017 $58.31 -8.33% 2,423.41 0.48%
33. Jul 31, 2017 $53.98 -7.43% 2,470.30 1.93%
34. Aug 31, 2017 $54.86 $0.25 2.09% 2,471.65 0.05%
35. Sep 30, 2017 $53.71 -2.10% 2,519.36 1.93%
36. Oct 31, 2017 $54.84 2.10% 2,575.26 2.22%
37. Nov 30, 2017 $57.82 $0.30 5.98% 2,647.58 2.81%
38. Dec 31, 2017 $57.43 -0.67% 2,673.61 0.98%
39. Jan 31, 2018 $56.81 -1.08% 2,823.81 5.62%
40. Feb 28, 2018 $57.10 $0.30 1.04% 2,713.83 -3.89%
41. Mar 31, 2018 $57.89 1.38% 2,640.87 -2.69%
42. Apr 30, 2018 $57.57 -0.55% 2,648.05 0.27%
43. May 31, 2018 $56.67 $0.30 -1.04% 2,705.27 2.16%
44. Jun 30, 2018 $48.85 -13.80% 2,718.37 0.48%
45. Jul 31, 2018 $52.39 7.25% 2,816.29 3.60%
46. Aug 31, 2018 $53.45 $0.36 2.71% 2,901.52 3.03%
47. Sep 30, 2018 $56.84 6.34% 2,913.98 0.43%
48. Oct 31, 2018 $58.27 2.52% 2,711.74 -6.94%
49. Nov 30, 2018 $66.72 $0.36 15.12% 2,760.17 1.79%
50. Dec 31, 2018 $64.40 -3.48% 2,506.85 -9.18%
51. Jan 31, 2019 $68.14 5.81% 2,704.10 7.87%
52. Feb 28, 2019 $70.26 $0.36 3.64% 2,784.49 2.97%
53. Mar 31, 2019 $74.34 5.81% 2,834.40 1.79%
54. Apr 30, 2019 $77.68 4.49% 2,945.83 3.93%
55. May 31, 2019 $76.06 $0.36 -1.62% 2,752.06 -6.58%
56. Jun 30, 2019 $83.83 10.22% 2,941.76 6.89%
57. Jul 31, 2019 $94.69 12.95% 2,980.38 1.31%
58. Aug 31, 2019 $96.56 $0.36 2.36% 2,926.46 -1.81%
59. Sep 30, 2019 $88.42 -8.43% 2,976.74 1.72%
60. Oct 31, 2019 $84.56 -4.37% 3,037.56 2.04%
61. Nov 30, 2019 $85.43 $0.41 1.51% 3,140.98 3.40%
62. Dec 31, 2019 $87.92 2.91% 3,230.78 2.86%
63. Jan 31, 2020 $84.83 -3.51% 3,225.52 -0.16%
64. Feb 29, 2020 $78.43 $0.41 -7.06% 2,954.22 -8.41%
65. Mar 31, 2020 $65.74 -16.18% 2,584.59 -12.51%
66. Apr 30, 2020 $76.73 16.72% 2,912.43 12.68%
67. May 31, 2020 $77.99 $0.41 2.18% 3,044.31 4.53%
68. Jun 30, 2020 $73.59 -5.64% 3,100.29 1.84%
69. Jul 31, 2020 $76.53 4.00% 3,271.12 5.51%
70. Aug 31, 2020 $84.47 $0.41 10.91% 3,500.31 7.01%
71. Sep 30, 2020 $85.92 1.72% 3,363.00 -3.92%
Average (R): 1.49% 0.81%
Standard deviation: 6.02% 4.16%

Show all

1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of SBUX during period t

3 Rate of return on S&P 500 (the market portfolio proxy) during period t


Variance and Covariance

Starbucks Corp., calculation of variance and covariance of returns

Microsoft Excel LibreOffice Calc
t Date RSBUX,t RS&P 500,t (RSBUX,tRSBUX)2 (RS&P 500,tRS&P 500)2 (RSBUX,tRSBUX)×(RS&P 500,tRS&P 500)
1. Nov 30, 2014 7.91% 2.45% 41.23 2.71 10.57
2. Dec 31, 2014 1.03% -0.42% 0.21 1.50 0.56
3. Jan 31, 2015 6.68% -3.10% 26.88 15.30 -20.28
. . . . . . .
. . . . . . .
. . . . . . .
70. Aug 31, 2020 10.91% 7.01% 88.69 38.42 58.37
71. Sep 30, 2020 1.72% -3.92% 0.05 22.38 -1.06
Total (Σ): 2,540.80 1,210.80 932.23
t Date RSBUX,t RS&P 500,t (RSBUX,tRSBUX)2 (RS&P 500,tRS&P 500)2 (RSBUX,tRSBUX)×(RS&P 500,tRS&P 500)
1. Nov 30, 2014 7.91% 2.45% 41.23 2.71 10.57
2. Dec 31, 2014 1.03% -0.42% 0.21 1.50 0.56
3. Jan 31, 2015 6.68% -3.10% 26.88 15.30 -20.28
4. Feb 28, 2015 7.17% 5.49% 32.27 21.92 26.59
5. Mar 31, 2015 1.28% -1.74% 0.04 6.49 0.53
6. Apr 30, 2015 4.71% 0.85% 10.34 0.00 0.14
7. May 31, 2015 5.12% 1.05% 13.17 0.06 0.88
8. Jun 30, 2015 3.19% -2.10% 2.89 8.46 -4.95
9. Jul 31, 2015 8.04% 1.97% 42.83 1.36 7.63
10. Aug 31, 2015 -5.28% -6.26% 45.91 49.93 47.88
11. Sep 30, 2015 3.89% -2.64% 5.76 11.92 -8.28
12. Oct 31, 2015 10.08% 8.30% 73.75 56.11 64.32
13. Nov 30, 2015 -1.57% 0.05% 9.36 0.57 2.32
14. Dec 31, 2015 -2.22% -1.75% 13.75 6.56 9.50
15. Jan 31, 2016 1.23% -5.07% 0.07 34.59 1.53
16. Feb 29, 2016 -3.88% -0.41% 28.91 1.49 6.56
17. Mar 31, 2016 2.56% 6.60% 1.14 33.54 6.18
18. Apr 30, 2016 -5.81% 0.27% 53.37 0.29 3.93
19. May 31, 2016 -2.03% 1.53% 12.40 0.53 -2.55
20. Jun 30, 2016 4.06% 0.09% 6.60 0.51 -1.84
21. Jul 31, 2016 1.63% 3.56% 0.02 7.58 0.37
22. Aug 31, 2016 -2.79% -0.12% 18.35 0.86 3.98
23. Sep 30, 2016 -3.72% -0.12% 27.15 0.87 4.85
24. Oct 31, 2016 -1.98% -1.94% 12.04 7.56 9.54
25. Nov 30, 2016 9.70% 3.42% 67.42 6.81 21.43
26. Dec 31, 2016 -4.23% 1.82% 32.72 1.02 -5.79
27. Jan 31, 2017 -0.54% 1.79% 4.14 0.96 -1.99
28. Feb 28, 2017 3.44% 3.72% 3.79 8.48 5.67
29. Mar 31, 2017 2.67% -0.04% 1.39 0.72 -1.00
30. Apr 30, 2017 2.86% 0.91% 1.87 0.01 0.14
31. May 31, 2017 6.33% 1.16% 23.36 0.12 1.69
32. Jun 30, 2017 -8.33% 0.48% 96.54 0.11 3.21
33. Jul 31, 2017 -7.43% 1.93% 79.55 1.27 -10.05
34. Aug 31, 2017 2.09% 0.05% 0.36 0.57 -0.45
35. Sep 30, 2017 -2.10% 1.93% 12.89 1.26 -4.03
36. Oct 31, 2017 2.10% 2.22% 0.37 1.99 0.86
37. Nov 30, 2017 5.98% 2.81% 20.14 4.00 8.98
38. Dec 31, 2017 -0.67% 0.98% 4.70 0.03 -0.38
39. Jan 31, 2018 -1.08% 5.62% 6.62 23.14 -12.38
40. Feb 28, 2018 1.04% -3.89% 0.21 22.11 2.14
41. Mar 31, 2018 1.38% -2.69% 0.01 12.22 0.38
42. Apr 30, 2018 -0.55% 0.27% 4.19 0.29 1.10
43. May 31, 2018 -1.04% 2.16% 6.43 1.83 -3.43
44. Jun 30, 2018 -13.80% 0.48% 233.86 0.10 4.95
45. Jul 31, 2018 7.25% 3.60% 33.10 7.81 16.08
46. Aug 31, 2018 2.71% 3.03% 1.48 4.92 2.70
47. Sep 30, 2018 6.34% 0.43% 23.51 0.14 -1.83
48. Oct 31, 2018 2.52% -6.94% 1.05 60.03 -7.92
49. Nov 30, 2018 15.12% 1.79% 185.66 0.96 13.33
50. Dec 31, 2018 -3.48% -9.18% 24.71 99.71 49.63
51. Jan 31, 2019 5.81% 7.87% 18.61 49.85 30.46
52. Feb 28, 2019 3.64% 2.97% 4.61 4.69 4.65
53. Mar 31, 2019 5.81% 1.79% 18.61 0.97 4.25
54. Apr 30, 2019 4.49% 3.93% 9.00 9.76 9.37
55. May 31, 2019 -1.62% -6.58% 9.71 54.55 23.01
56. Jun 30, 2019 10.22% 6.89% 76.08 37.03 53.08
57. Jul 31, 2019 12.95% 1.31% 131.36 0.25 5.79
58. Aug 31, 2019 2.36% -1.81% 0.74 6.85 -2.25
59. Sep 30, 2019 -8.43% 1.72% 98.47 0.83 -9.03
60. Oct 31, 2019 -4.37% 2.04% 34.33 1.53 -7.24
61. Nov 30, 2019 1.51% 3.40% 0.00 6.74 0.05
62. Dec 31, 2019 2.91% 2.86% 2.02 4.21 2.92
63. Jan 31, 2020 -3.51% -0.16% 25.08 0.94 4.86
64. Feb 29, 2020 -7.06% -8.41% 73.18 84.99 78.86
65. Mar 31, 2020 -16.18% -12.51% 312.35 177.42 235.41
66. Apr 30, 2020 16.72% 12.68% 231.77 141.05 180.81
67. May 31, 2020 2.18% 4.53% 0.47 13.84 2.54
68. Jun 30, 2020 -5.64% 1.84% 50.91 1.06 -7.36
69. Jul 31, 2020 4.00% 5.51% 6.26 22.11 11.76
70. Aug 31, 2020 10.91% 7.01% 88.69 38.42 58.37
71. Sep 30, 2020 1.72% -3.92% 0.05 22.38 -1.06
Total (Σ): 2,540.80 1,210.80 932.23

Show all

VarianceSBUX = Σ(RSBUX,tRSBUX)2 ÷ (71 – 1)
= 2,540.80 ÷ (71 – 1)
= 36.30

VarianceS&P 500 = Σ(RS&P 500,tRS&P 500)2 ÷ (71 – 1)
= 1,210.80 ÷ (71 – 1)
= 17.30

CovarianceSBUX, S&P 500 = Σ(RSBUX,tRSBUX)×(RS&P 500,tRS&P 500) ÷ (71 – 1)
= 932.23 ÷ (71 – 1)
= 13.32


Systematic Risk (β) Estimation

Microsoft Excel LibreOffice Calc
VarianceSBUX 36.30
VarianceS&P 500 17.30
CovarianceSBUX, S&P 500 13.32
Correlation coefficientSBUX, S&P 5001 0.53
βSBUX2 0.77
αSBUX3 0.87%

Calculations

1 Correlation coefficientSBUX, S&P 500
= CovarianceSBUX, S&P 500 ÷ (Standard deviationSBUX × Standard deviationS&P 500)
= 13.32 ÷ (6.02% × 4.16%)
= 0.53

2 βSBUX
= CovarianceSBUX, S&P 500 ÷ VarianceS&P 500
= 13.32 ÷ 17.30
= 0.77

3 αSBUX
= AverageSBUX – βSBUX × AverageS&P 500
= 1.49%0.77 × 0.81%
= 0.87%


Expected Rate of Return

Microsoft Excel LibreOffice Calc
Assumptions
Rate of return on LT Treasury Composite1 RF 1.61%
Expected rate of return on market portfolio2 E(RM) 12.35%
Systematic risk (β) of Starbucks Corp.’s common stock βSBUX 0.77
 
Expected rate of return on Starbucks Corp.’s common stock3 E(RSBUX) 9.88%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 E(RSBUX) = RF + βSBUX [E(RM) – RF]
= 1.61% + 0.77 [12.35%1.61%]
= 9.88%