Stock Analysis on Net

Starbucks Corp. (NASDAQ:SBUX)

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Capital Asset Pricing Model (CAPM)

Microsoft Excel

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

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Rates of Return

Starbucks Corp., monthly rates of return

Microsoft Excel
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, 2016
1. Nov 30, 2016
2. Dec 31, 2016
3. Jan 31, 2017
. . . . . . .
. . . . . . .
. . . . . . .
70. Aug 31, 2022
71. Sep 30, 2022
Average (R):
Standard deviation:
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, 2016
1. Nov 30, 2016
2. Dec 31, 2016
3. Jan 31, 2017
4. Feb 28, 2017
5. Mar 31, 2017
6. Apr 30, 2017
7. May 31, 2017
8. Jun 30, 2017
9. Jul 31, 2017
10. Aug 31, 2017
11. Sep 30, 2017
12. Oct 31, 2017
13. Nov 30, 2017
14. Dec 31, 2017
15. Jan 31, 2018
16. Feb 28, 2018
17. Mar 31, 2018
18. Apr 30, 2018
19. May 31, 2018
20. Jun 30, 2018
21. Jul 31, 2018
22. Aug 31, 2018
23. Sep 30, 2018
24. Oct 31, 2018
25. Nov 30, 2018
26. Dec 31, 2018
27. Jan 31, 2019
28. Feb 28, 2019
29. Mar 31, 2019
30. Apr 30, 2019
31. May 31, 2019
32. Jun 30, 2019
33. Jul 31, 2019
34. Aug 31, 2019
35. Sep 30, 2019
36. Oct 31, 2019
37. Nov 30, 2019
38. Dec 31, 2019
39. Jan 31, 2020
40. Feb 29, 2020
41. Mar 31, 2020
42. Apr 30, 2020
43. May 31, 2020
44. Jun 30, 2020
45. Jul 31, 2020
46. Aug 31, 2020
47. Sep 30, 2020
48. Oct 31, 2020
49. Nov 30, 2020
50. Dec 31, 2020
51. Jan 31, 2021
52. Feb 28, 2021
53. Mar 31, 2021
54. Apr 30, 2021
55. May 31, 2021
56. Jun 30, 2021
57. Jul 31, 2021
58. Aug 31, 2021
59. Sep 30, 2021
60. Oct 31, 2021
61. Nov 30, 2021
62. Dec 31, 2021
63. Jan 31, 2022
64. Feb 28, 2022
65. Mar 31, 2022
66. Apr 30, 2022
67. May 31, 2022
68. Jun 30, 2022
69. Jul 31, 2022
70. Aug 31, 2022
71. Sep 30, 2022
Average (R):
Standard deviation:

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
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, 2016
2. Dec 31, 2016
3. Jan 31, 2017
. . . . . . .
. . . . . . .
. . . . . . .
70. Aug 31, 2022
71. Sep 30, 2022
Total (Σ):
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, 2016
2. Dec 31, 2016
3. Jan 31, 2017
4. Feb 28, 2017
5. Mar 31, 2017
6. Apr 30, 2017
7. May 31, 2017
8. Jun 30, 2017
9. Jul 31, 2017
10. Aug 31, 2017
11. Sep 30, 2017
12. Oct 31, 2017
13. Nov 30, 2017
14. Dec 31, 2017
15. Jan 31, 2018
16. Feb 28, 2018
17. Mar 31, 2018
18. Apr 30, 2018
19. May 31, 2018
20. Jun 30, 2018
21. Jul 31, 2018
22. Aug 31, 2018
23. Sep 30, 2018
24. Oct 31, 2018
25. Nov 30, 2018
26. Dec 31, 2018
27. Jan 31, 2019
28. Feb 28, 2019
29. Mar 31, 2019
30. Apr 30, 2019
31. May 31, 2019
32. Jun 30, 2019
33. Jul 31, 2019
34. Aug 31, 2019
35. Sep 30, 2019
36. Oct 31, 2019
37. Nov 30, 2019
38. Dec 31, 2019
39. Jan 31, 2020
40. Feb 29, 2020
41. Mar 31, 2020
42. Apr 30, 2020
43. May 31, 2020
44. Jun 30, 2020
45. Jul 31, 2020
46. Aug 31, 2020
47. Sep 30, 2020
48. Oct 31, 2020
49. Nov 30, 2020
50. Dec 31, 2020
51. Jan 31, 2021
52. Feb 28, 2021
53. Mar 31, 2021
54. Apr 30, 2021
55. May 31, 2021
56. Jun 30, 2021
57. Jul 31, 2021
58. Aug 31, 2021
59. Sep 30, 2021
60. Oct 31, 2021
61. Nov 30, 2021
62. Dec 31, 2021
63. Jan 31, 2022
64. Feb 28, 2022
65. Mar 31, 2022
66. Apr 30, 2022
67. May 31, 2022
68. Jun 30, 2022
69. Jul 31, 2022
70. Aug 31, 2022
71. Sep 30, 2022
Total (Σ):

Show all

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

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

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


Systematic Risk (β) Estimation

Microsoft Excel
VarianceSBUX
VarianceS&P 500
CovarianceSBUX, S&P 500
Correlation coefficientSBUX, S&P 5001
βSBUX2
αSBUX3

Calculations

1 Correlation coefficientSBUX, S&P 500
= CovarianceSBUX, S&P 500 ÷ (Standard deviationSBUX × Standard deviationS&P 500)
= ÷ ( × )
=

2 βSBUX
= CovarianceSBUX, S&P 500 ÷ VarianceS&P 500
= ÷
=

3 αSBUX
= AverageSBUX – βSBUX × AverageS&P 500
= ×
=


Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF
Expected rate of return on market portfolio2 E(RM)
Systematic risk (β) of Starbucks Corp. common stock βSBUX
 
Expected rate of return on Starbucks Corp. common stock3 E(RSBUX)

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]
= + []
=