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Analysis
TEAM NUMBER: 17
ADRIAN AIZENSTAT
MATT FLUHARTY
WESLEY JONES
JOHN LITHGOW
JARROD SCHILLING
Peet's Coffee and Tea Inc. 6.15% 5.83% 14.80% 2.93 0% 100%
Financial Comparison to Industry
DIRECT COMPETITOR COMPARISON
SBUX Pvt1 NSRGF.PK THI INDUSTRY
Market Cap: 23.78B N/A N/A 6.18B 6.18B
Employ-ees: 145,800 953 1
N/A 500 1.79K
Qtrly Rev Growth (yoy): 21.80% N/A N/A 15.50% 19.30%
Revenue (ttm): 8.21B 517.00M 1
N/A 1.48B 1.48B
Gross Margin (ttm): 58.76% N/A N/A 27.64% 35.30%
EBITDA (ttm): 1.36B N/A N/A 404.44M 404.44M
Oper Margins (ttm): 10.24% N/A N/A 20.70% 12.78%
Negotiates independently of
commodities market
Enters into long-term contracts with
farmers
“For years it has paid fair-market prices
to 3rd world coffee farmers and helped
develop ecologically sound growing
practices” [Forbes]
Builds direct relationships with
SWOT Analysis
Strengths
Reputation for having the finest products and services in
the world
Has expanded into 40 countries and has over 9000 cafes
worldwide
Fortune’s Top 100 Companies To Work For in 2005
Forbe’s Most Admired Companies 2007 (#2)
An organization based on quality products, with strong
ethical values
Weaknesses
Some analysts predict that their creativity and innovation may
weaken in the future
Needs to increase the company’s globalization in order to fully
exploit untapped markets
May have tough time diversifying into other sectors
SWOT cntd.
Opportunities
Product Line Extensions
CD burning service with Hewlett
Packard and Fair Trade products
International expansion
Pacific Rim nations and India.
Co-branding and brand
franchising opportunities with
other food and drink
manufacturers
PEPSI CO
Product Placement
SWOT
Threats
Substitutes for coffee
Cannibalization
Rising cost of coffee
and dairy products
“Watering-down of the
Starbucks experience”
and “commoditization
of our brand”
Internal memo that
surfaced in February
warning executives
Intrinsic Value
Discounted Cash Flow Analysis
EBIT Growth
Years 1-5: Upper end of analysts consensus,
24%
Years 6-10: Reduced domestic growth,
continuing international growth, 20%
Years 11-Infinity: Assumed rate of inflation,
3%
Intrinsic Value
Steady State NOWC and NFA through
infinity.
Beta Estimate
Scottrade, Thomson One, Yahoo
Finance, S&P.
Used 4 betas to compute 4 WACCS and
4 intrinsic values.
Intrinsic Value
Other Assumptions
Market Risk Premium: 5%
Long-term Treasury Yield: 4.82%
Tax Rate: 37%
Equity Weight: 87%
Debt Weight: 13%
Overall Summary