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Starbucks Corporation (SBUX - Analyst Report) is set to report fourth-quarter and fiscal 2013 results on Oct 30 after the market closes. Last quarter, the coffee giant delivered a 3.77% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider this Quarter

In the fourth quarter, management expects to post earnings in the range of 59 cents to 60 cents. The guidance, however, includes a combined 3 cents gain from sale of equity stakes in joint ventures in Argentina and Chile.

Revenues are expected to grow in the range of 10%–13%. However, comps in the fourth quarter are not expected to be as strong as the third quarter. In the fourth quarter, comps are expected to range between 5% and 7% against 8% in the third quarter. Starbucks expects operating margins to improve 100 basis points (bps) driven by better operating leverage. Lower commodity costs are expected to benefit earnings by 2 cents in the quarter which will be partially offset by the lower pricing for packaged coffee and unfavorable impact of currency.

Earnings Whispers?

Our proven model does not conclusively show that Starbucks is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP:  The Zacks ESP is 0.0%.

Zacks Rank. Starbucks’ Zacks Rank #2 (Buy) when combined with a 0.0% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies in the retail/restaurants sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Red Robin Gourmet Burgers Inc. (RRGB - Analyst Report), with Earnings ESP of +3.70% and a Zacks Rank #1 (Strong Buy).

Papa John's International Inc. (CBRL - Snapshot Report), with Earnings ESP of +4.62% and a Zacks Rank #2 (Buy).

Buffalo Wild Wings Inc. (BWLD - Analyst Report), with Earnings ESP of +1.16% and a Zacks Rank #3 (Hold).

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