When Starbucks' (NASDAQ:SBUX) shares stumbled earlier this year on what the market perceived as weak same-store sales, Chairman Howard Schultz was fairly outspoken that the market had gotten it wrong. At the time I found the market's reaction amusing as well, but I also felt that the decline left the shares fairly valued.

According to the company's most recent 10-Q filed with the SEC, the company put its money where its chairman's mouth is, and picked up the pace with its share repurchase program. Starbucks' quarterly report shows the company purchased approximately 9.5 million shares during the quarter. This brings the total shares purchased this year to 16 million at a total cost of $807 million and reduces the diluted shares outstanding by approximately 4%.

The large repurchases in the last two quarters are a change of pace for the company, which for the last couple of years had been using its increasingly large free cash flow to build up a war chest of cash, repurchasing shares only to an extent that partially offset the dilution of its stock option program.

As Starbucks shareholder, I reassess what I believe the shares are worth a couple of times a year. Most recently, this work yielded a range of values between $45 and $56 a share, with the higher price reflecting more aggressive estimates on my part. With Starbucks paying an average of $50.29 per share so far this year, the company's purchases are smack in the middle of my estimate for what the shares are worth. And while I prefer to buy at a discount to my estimates, Starbucks obviously has more data to operate with than I do when making a purchase decision.

As a shareholder of Starbucks for a number of years and a member of our Income Investor team, I've had my eye on Starbucks' increasing free cash flow, and have been hoping the company would initiate a regular cash dividend. This would put Starbucks in fairly good company; other healthy growers that pay a dividend include Costco (NASDAQ:COST) and Abercrombie & Fitch (NYSE:ANF). While a dividend is certainly still possible in the next couple of years, and the method I generally prefer for returning value to shareholders, it's hard to quibble with Starbucks purchasing its own shares at what appears to be a reasonable price.

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Costco is a Motley Fool Stock Advisor recommendation.

Nathan Parmelee owns shares of Starbucks and Costco but has no financial interest in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.