According to outgoing Starbucks Corporation (NASDAQ:SBUX) chairman Howard Schultz, shares of the coffee giant are being undervalued at the moment. On CNBC’s “Trading Nation,” a pair of analysts explained why they disagree with his assessment.
CNBC shares the discussion surrounding Starbucks.
Starbucks shares have fallen 11 percent this year as the coffee giant has grappled with weakened same-store sales and flat traffic in recent quarters, but outgoing executive chairman Howard Schultz said last week the stock is inexpensive.
Some market watchers are less than optimistic, at least in the near term.
For Chantico Global CEO Gina Sanchez, the company’s recent announcement that it will be closing 150 locations is giving her pause. “I think there’s definitely more if you peel back this onion, because it’s more than just the store closures,” Sanchez said. “Theoretically, store closures should actually be net positive over time. However, you also have the issue of rising labor costs. That’s another piece of the story.”
Bear Traps Report editor Larry McDonald warns that the closings may just be the first shoe that has dropped. “When companies go through these restructurings, and they’re closing down stores, a lot of times, most times, investors have to realize they bleed out the truth one drop at a time,” McDonald said.
Starbucks Corporation shares were trading at $50.51 per share on Monday afternoon, down $0.73 (-1.42%). Year-to-date, SBUX has declined -11.11%, versus a 1.93% rise in the benchmark S&P 500 index during the same period.