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Starbucks Corporation Message Board

  • despiteit2 despiteit2 Jan 29, 2014 2:54 PM Flag

    say good bye to sbux

    "I think it would certainly challenge Starbucks," says Sanchez. "If you look at what it would take in terms of what it would take out of their profits, it's anywhere from $300 million to half a billion [dollars]."

    Over the last four quarters, Starbucks earned roughly $1.8 billion (excluding the effects of a $2.2 billion payout to Kraft foods over a dispute.

    "Starbucks have been benefiting from continued low costs and rising margins," says Sanchez. "So, I do think that a raise to a $10 minimum wage would certainly take a bite out of Starbucks."

    Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, disagrees that Starbucks would suffer with a higher minimum wage.

    "Let's remember Starbucks [is] historically a very employee-friendly firm," says Ross. "That pro-employee stance is really the cornerstone of their success. So, I don't really think those higher wages will impact the stock."

    Indeed, in the last five years, Starbucks stock is up 683%. However, since its all-time high in November 2013, the stock is down nearly 10%. According to Ross, the stock is hitting both a support level and its 200-day moving average, making it a buying opportunity.

    "That potentially could be a springboard to higher prices," says Ross. "I like the stock here. I would be a buyer on the double-digit pullback to key support."

    To see the rest of the discussion on what minimum wage means for Starbucks, watch the video above.

    More from Talking Numbers:

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