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Starbucks (SBUX) Gears Up for Q4 Earnings: What's in Store?

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Starbucks Corporation (SBUX - Free Report) is scheduled to report fourth-quarter fiscal 2023 results on Nov 2, after the closing bell. In the last reported quarter, the company delivered an earnings beat of 5.3%.

Q4 Estimates

The Zacks Consensus Estimate for earnings is pegged at 97 cents per share, indicating growth of 19.8% year over year. In the past 30 days, earnings estimates have witnessed upward revisions by 1%. The Zacks Consensus Estimate for revenues is pegged at $9.22 billion, suggesting an increase of 9.6% from a year ago.

Factors to Note

SBUX’s solid recovery in China, aim to improve customer experience with innovative new store designs and upgraded product offerings, and supply-chain efficiencies are likely to have aided the top line. Focus on store growth and robust loyalty program are added positive. During fiscal 2023, it expects store count in the United States and China to grow approximately 3% and 13%, respectively.

Robust comparable sales growth is expected to have benefited the company’s top line in the quarter under discussion. Our model predicts North America and International sales growth to increase 7% and 13% year over year, respectively.

In fourth-quarter fiscal 2023, our model predicts North America and International sales to be $6,774.7 million and $1,936.5 million, implying a 10.4% and 9% jump year over year, respectively. Starbucks is gaining from a rise in transactions and average ticket growth. We expect Channel Development sales to decline 4.2% year over year to $463.6 million.

The ongoing inflationary pressure is likely to have negatively impacted the bottom line. Its ingredients are witnessing a significant uptick in price in the last few quarters. Our model anticipates total operating expenses to be $4,435.6 million, suggesting a 5.2% improvement from the prior-year quarter.

Starbucks Corporation Price and EPS Surprise Starbucks Corporation Price and EPS Surprise

Starbucks Corporation price-eps-surprise | Starbucks Corporation Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Starbucks this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Starbucks has an Earnings ESP (the difference between the Most Accurate Estimate and the Zacks Consensus Estimate) of +0.41%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Starbucks currently carries a Zacks Rank #3.

Other Stocks to Consider

Here are some stocks worth considering from the Zacks Retail-Wholesale space as our model shows that these too have the right combination of elements to beat on earnings this season.

The Wendy's Company (WEN - Free Report) has an Earnings ESP of +2.30% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

WEN’s earnings for the to-be-reported quarter are expected to climb 8.3%. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 4.8%.

Papa John's International, Inc. (PZZA - Free Report) has an Earnings ESP of +4.94% and a Zacks Rank of 3.

PZZA is expected to register 3.7% growth in earnings for the quarter to be reported. Notably, it reported better-than-expected earnings in the trailing three out of four quarters and missed once, the average surprise being 9.5%.

Restaurant Brands International Inc. (QSR - Free Report) has an Earnings ESP of +0.01% and a Zacks Rank of 3.

QSR’s earnings for the quarter under review are expected to decline 12.5%. It reported better-than-expected earnings in three of the trailing four quarters and was in line on the remaining one occasion, the average surprise being 12.7%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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