SBUX - Starbucks earnings preview: Investors look for recovery in China and pricing power in North America

2023-07-31 13:56:41 ET

Starbucks Corporation ( NASDAQ: SBUX ) will report FQ3 earnings after the closing bell on August 1. The coffee store operator is forecast to disclose revenue of $9.29B and EPS of $0.95 for the quarter. Same-store sales are expected to be up 11.1%, including a 41% pop for the China business. Same-store sales are anticipated to be up 7.70% in the U.S. Overall, SBUX is expected to see traffic growth of 8.5% and ticket growth of 2.5% for the quarter. An operating margin of 16.9% is anticipated.

Key areas of focus with the earnings call include the read on U.S. sales momentum into FQ4 and if the China recovery story moves the needle on the International segment margin forecast for FY24. Updates on the SBUX loyalty program, new products, labor productivity, and equipment innovation could also boost sentiment. Starbucks ( SBUX ) management will also be in the spotlight to see if the Seattle-based company backs guidance that it still intends to hit 7% global unit growth this year with 75% of that growth outside of North America, and aim for a longer-term target of 9K China stores by 2025. The forecast for 2023-2025 EPS growth of 15% to 20% could also be tweaked.

Shares of Starbucks (Starbucks) rose 0.36% in afternoon trading on Monday. The stock is down 5.90% since the last earnings report and is up just over 1% on a year-to-date basis. Options trading on Starbucks (Starbucks) implies a post-earnings swing of 5% following the report. Starbucks ( SBUX ) fell 9% after its last earnings release in early May, when the commentary on the earnings call rattled investors. Nike ( NKE ) and Yum China ( YUMC ) are the two stocks that have correlated the closest to SBUX on the day after earnings over the last two years.

More on Starbucks:

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• Starbucks's track record of earnings beats and misses
• Relative strength index and moving averages on Starbucks
• Growth metrics on Starbucks
• Seeking Alpha's Quant Rating for Starbucks

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