Starbucks earnings could provide a jolt as U.S. strength runs up against China weakness
Stephen Chernin/Getty Images News

Starbucks (NASDAQ:SBUX) will report earnings on November 3 after the closing bell with investors and analysts showing some anxiety over the read on China and pricing power in other international markets.
While Starbucks' U.S. same-store revenue for FQ4 in the U.S. might be up at a high single-digit rate off higher prices and strong cold-beverage sales, weak results are expected from China with comparable sales forecast to fall by 19%. A drop in margins in Europe is also expected to raise some eyebrows. A positive surprise from the Starbucks (SBUX) could be the guidance for Americas operating margin. Evercore ISI thinks the margin guidance may come in ahead of the consensus mark of 18.5% - driven by lower labor turnover, supply chain savings and the lapping of inflation in upcoming quarters.
The consensus expectation is that Starbucks (SBUX) will report revenue of $8.32B on the top line and EPS of $0.72. Analysts have been clipping their EPS estimates at a rapid rate, with 23 out of the last 25 revisions to the downward side.
Key topics on the conference call could include the strength of the fall beverage lineup in the U.S., the impact of more workers being back in the office, the latest update on the unionization battle at some stores, and the expected recovery in China if lockdown restrictions ease as some predict. Also look for discussion from Starbucks (SBUX) management on how the benefits of increased digital capabilities and food/beverage innovation could feed comparable sales next year and beyond.
Options trading on SBUX is implying a share price swing of 5.4% after the report drops. Shares of Starbucks (SBUX) gained 4.3% after the company's last earnings report was released. The coffee chain giant has strung together four consecutive EPS beats.