Starbucks Stock Is Not Worth It Yet

Summary:

  • Despite the positive market reaction to Starbucks’ new CEO, I rate SBUX a “Hold” due to ongoing business challenges and skepticism about a quick turnaround.
  • Recent Q3 results show declining comparable store sales globally, particularly in China, and a drop in EBIT margin and EPS, indicating business deterioration.
  • While Starbucks remains financially healthy, observed traffic data suggests it is underperforming compared to peers, casting doubt on medium-term growth prospects.
  • Current valuations for SBUX seem too high; even with a premium, the stock’s potential upside appears limited, warranting a “Hold” rating.

Starbucks coffee sign hanging outside a shop

JohnFScott

My Thesis

Although the market reacted positively to the recent news of Starbucks (NASDAQ:SBUX) appointing a new CEO, and there’s optimism about resuming business growth and improving margins from many sell-side analysts, I have my doubts about


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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