Starbucks (SBUX) let CEO Laxman Narasimhan go barely a year into the job, replacing him with previous Chipotle Mexican Grill CEO Brian Niccol. 

After the stock lost as much as 20% through 2024, this was the turnaround investors had been desperate for. The stock gained 23% on the news. The news sent Chipotle shares (CMG) nearly 8% lower as the popular Mexican food chain will need to find its own replacement now.

Niccol had been at the helm of Chipotle for 6 years, responsible for tremendous growth both in company market share and stock performance. Before the news broke, CMG had gained 215% in 5 years, dramatically outpacing the S&P 500. 

While management and investors are optimistic Niccols will bring the same results to Starbucks, some experts are encouraging them to tether expectations. The company has dug itself a hole that will take time to get out of.

Bill Nygren, a portfolio manager with Oakmark Select mutual fund, says that turnaround stories like the one we’re witnessing here can take years to manifest. He says it can take 6 months for a new CEO to assess current talent and then 6 more months to replace any underperforming team members.

In looking at the data for dozens of companies that have hired new CEOs, it appears Nygren is right in stating that most of the time, stock prices will continue to struggle in comparison to companies with established CEOs.

But while the turnaround might not be immediate, experts say this is a step in the right direction for Starbucks. Baird analyst David Tarantino called it an excellent hire, referencing not just Niccol’s performance at Chipotle but also Taco Bell and Procter & Gamble.

The rally we saw yesterday has already begun to fizzle, too. SBUX is down 4% so far Wednesday. Still, we took a moment to assess this opportunity in the VectorVest stock software and found 3 reasons it may be worth buying this stock today. Here’s what you need to know…

SBUX Has Fair Upside Potential and Safety With Very Good Timing

VectorVest is a proprietary stock rating system designed to help you with more trades with less work and stress. It takes complex technical/fundamental data and distills it into 3 simple ratings, helping you make calculated, emotionless investment decisions.

These are relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. You’re even given a buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. As for SBUX, here’s what we found:

  • Fair Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. This makes it a far superior indicator than the typical comparison of price to value alone. SBUX has a fair RV rating of 1.01.
  • Fair Safety: The RS rating is a risk indicator. It’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. SBUX has a fair RS rating of 0.99.
  • Very Good Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year. After yesterday’s performance, SBUX has a very good RT rating of 1.39.

The overall VST rating of 1.16 is good, and SBUX is currently rated a BUY in the VectorVest system. But before you make your next move, take a closer look at this free stock analysis and set yourself up for success using our tried-and-true investment system!

Want These Types of Insights at Your Fingertips so You Can Win More Trades?

Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. SBUX has struggled through 2024, but its appointment of a new CEO could be exactly what’s needed to turn things around. While it may take time before tangible improvements can be made, it’s a step in the right direction. The stock itself has fair upside potential and safety with very good timing.

Before you invest, check VectorVest! Click here to ANALYZE ANY STOCK FREE and see our system in action!