Starbucks Corporation (SBUX) vs AT&T Inc. (T): Which Is the Better Buy in 2026?
As of 2026-06-19, SBUX is overvalued at $101, with a DCF intrinsic value of $82 and a margin of safety of -23%. T is undervalued at $22, with an intrinsic value of $57 and a margin of safety of 62%. Of the two, T has the wider margin of safety.
Rewards
- ★Starbucks Corporation has maintained ROIC above 10% for 4 consecutive years, suggesting solid business economics.
- ★Starbucks Corporation scores 71/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
- ★Free cash flow has grown at a 16.2% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★Each dollar of retained earnings has created $14.89 of earning power — management is an exceptional capital allocator.
- ★FCF yield of 12.7% is historically attractive — the business generates significant cash relative to its price.
Risks
- ⚠Gross margin of 21.9% is low, suggesting a competitive or commodity-like market with limited pricing power.
- ⚠Trailing P/E of 76.8x is 119% above the historical average of 35.1x — the stock trades at a premium to its own history.
- ⚠Net debt/EBITDA of 4.2x indicates heavy leverage — it would take over 4 years of EBITDA to pay off net debt.
- ⚠Altman Z-Score of 0.89 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →Requires positive FCF to compute implied growth rate.
What growth rate is the market pricing in at $22?
The market implies +2.5% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding +4.2%, reflecting heavy growth investment expected to generate future returns.
Economic Moat Score
Learn more →Wide moat driven primarily by roic consistency. Margin Stability is the area most vulnerable to competitive pressure.
Narrow moat with margin stability as the key competitive advantage. Improving roic consistency would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pricing this stock without strong emotion in either direction"
"Market is pessimistic — investigate whether fears are temporary or structural"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: SBUX vs T
Is Starbucks Corporation or AT&T Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, T trades at a 61.6% margin of safety (intrinsic value $57 vs. price $22), compared to SBUX's -23.0% margin of safety (intrinsic $82 vs. $101).
Which stock has a wider economic moat, Starbucks Corporation or AT&T Inc.?▼
SBUX scores 71/100 (Wide moat), while T scores 57/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is AT&T Inc. in financial distress?▼
T's Altman Z-Score of 0.9 places it in the Distress zone, signaling elevated bankruptcy risk. SBUX scores 2.5 (Grey zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Starbucks Corporation or AT&T Inc.?▼
AT&T Inc. (T) generates a 12.7% free cash flow yield, compared to Starbucks Corporation's -1.1%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Starbucks Corporation or AT&T Inc.?▼
SBUX earns 10.5% ROIC versus T's 7.9%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Starbucks Corporation's or AT&T Inc.'s?▼
T's dividend earns a safety score of 91/100 (Very Safe), compared to SBUX's 24/100 (Unsafe). T has raised its dividend for 2 consecutive years.