How Investors May Respond To Starbucks (SBUX) Strike Vote Amid Turnaround and Holiday Season Challenges

• Starbucks Workers United recently launched a strike authorization vote that could lead to an open-ended labor stoppage beginning October 24, focusing on demands for higher take-home pay, better hours, and resolving legal issues before the holiday season.
• This labor action comes at a critical moment as Starbucks faces declining comparable sales, a turnaround plan, and ongoing operational challenges.
• Given the heightened risk of operational disruption from potential strikes, we'll explore how this may impact Starbucks' investment outlook and turnaround strategy.

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Starbucks Investment Narrative Recap

Starbucks investors need to believe in the company’s ability to revitalize growth through operational improvements and enhanced partner engagement, despite recent pressures on comparable sales and margins. The union’s latest strike authorization vote introduces the risk of significant labor disruption right before the holiday season, a key driver for near-term performance, with potential to weigh heavily on Starbucks’ high labor cost structure and turnaround efforts if an open-ended strike materializes.

Among recent announcements, Starbucks’ plan to add assistant managers at nearly every U.S. and Canadian location is particularly relevant. This initiative could have direct implications for labor relations and operational efficiency, especially as the company navigates union demands for better pay and working conditions, factors central to both the current labor dispute and the broader turnaround strategy.

By contrast, investors should also be aware that a prolonged labor disruption could mean...

Read the full narrative on Starbucks (it's free!)

Starbucks' narrative projects $45.5 billion revenue and $4.6 billion earnings by 2028. This requires 7.5% yearly revenue growth and a $2.0 billion earnings increase from $2.6 billion.

Uncover how Starbucks' forecasts yield a $96.60 fair value, a 12% upside to its current price.

Exploring Other Perspectives

Fifteen members of the Simply Wall St Community estimate Starbucks' fair value to range from US$51.41 to US$110. Labor-related cost pressures, particularly from strike activity, remain a meaningful risk for future profitability and store performance, so consider how differences in perspective can shape your own outlook.

Explore 15 other fair value estimates on Starbucks - why the stock might be worth as much as 28% more than the current price!

Build Your Own Starbucks Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Starbucks research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.
• Our free Starbucks research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Starbucks' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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