Although Starbucks (SBUX 0.43%) has been a fantastic investment throughout its history as a public company, it hasn't worked out as well for shareholders recently.

As of this writing, this top coffee stock trades 22% off its peak price. And in the past three years, it has produced a total return that would've lost investors 5% of their starting capital. This compares unfavorably to the 32% total return of the S&P 500.

Starbucks' business is in trouble, as the shares' performance suggests. But is the stock a once-in-a-decade opportunity right now?

Disappointing trends

It's an understatement to say Starbucks has been struggling mightily. The economy, and particularly the consumer, have held up relatively well in the past year, despite a constant feeling of uncertainty. However, Starbucks hasn't seen such positive results.

In the latest fiscal quarter (Q4 2024, ended Sept. 29), the business reported a same-store sales (SSS) decline of 7% globally, with notable drops in its two key markets, the U.S. and China. This was the third straight quarter that same-store sales showed a year-over-year decrease, not an encouraging sign.

Transactions counts have been falling, indicating weak foot traffic. People aren't pleased with Starbucks' high prices, or the long wait times they've been experiencing.

It also doesn't help Starbucks that the retail coffee industry is extremely competitive and fragmented. The five largest chains in the U.S. command less than half the market share. People have plenty of options to choose from when they don't want to spend their money at a large chain. The fact that there are zero switching costs for customers means that Starbucks has minimal room for error before it starts to lose business, which is what appears to have happened.

New leadership

Between April 2023 and August 2024, Laxman Narasimhan was the CEO of Starbucks. Even though he was likely hand-picked by longtime previous CEO Howard Schultz, he failed to prevent weak sales and profit trends. The stock tanked during his tenure.

Knowing it was time for a change, the company brought in Brian Niccol, formerly in the top job at Chipotle Mexican Grill, in September to fix Starbucks and turn things around. The stock shot up more than 20% when the new CEO was announced in August, demonstrating the market's optimism that Niccol is the right person for the job.

Niccol deserves credit for directing Chipotle's expansion, which resulted in a tremendous gain for shareholders in the past few years. Under Niccol's leadership, the Tex-Mex chain saw its revenue and earnings soar.

His priorities right now are to leverage Starbucks' well-recognized brand to win back customers, especially in the U.S. The focus is to speed up order fulfillment, provide tools to help employees do their jobs better, and highlight the brand.

Starbucks' valuation

As of this writing, the stock carries a price-to-sales (P/S) ratio of 3.1. The situation looks cheap, as the current valuation is a 17% discount to the average of the past five years. This makes sense, as the company continues to be challenged, namely when it comes to driving store-level sales growth.

The positive spin is that Starbucks possesses one of the world's strongest consumer brands, and it has stood the test of time over the decades.

But only investors who believe that Brian Niccol can orchestrate a successful turnaround should buy the stock. If things head in the right direction, the payoff could be big for shareholders, and Starbucks could very well end up being a once-in-a-decade opportunity.

For more risk-average investors, perhaps the best course of action is to wait until Starbucks gets back to positive same-store sales growth before considering buying the stock.