Solid Americas Segment To Aid Starbucks' (SBUX) Q4 Earnings

Starbucks Corporation (NASDAQ:SBUX) is scheduled to report fourth-quarter fiscal 2019 results on Oct 30, after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 8.3%.

Q4 Expectations

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 70 cents, indicating an improvement of 12.9% from the year-ago reported figure. Over the past 30 days, the company’s earnings estimates have been stable. For quarterly revenues, the consensus mark is pegged at $6,632 million, suggesting growth of 5.4% from the prior-year quarter.

Let’s delve deeper to find out how the company’s top and bottom line will shape up in fourth-quarter fiscal 2019.

Factors at Play

Robust performance of Americas and China-Asia-Pacific (CAP) segments are likely to get reflected in the company’s fourth-quarter results. Further, the company’s third-quarter performance is likely to reflect new store additions, expansion in China and positive global comparable store sales.

The Zacks Consensus Estimate for revenues for Americas and CAP segments is anticipated to witness year-over-year growth of nearly 7% and 11% to $1,322 million and $4,563 million, respectively. Rapid unit growth, rising brand awareness and increased usage of the digital/mobile/loyalty platforms is likely to have benefited China and the Asia-Pacific region. In a bid to boost growth in China, the company had announced a partnership with Alibaba (NYSE:BABA) for providing seamless Starbucks Experience. Starbucks also began delivery services in Beijing and Shanghai via Alibaba's Ele.me platform. These initiatives are likely to get reflected in the company’s third-quarter performance.

However, Channel Development, and Europe, Middle East and Africa (EMEA) segments’ dismal performance are likely to have weighed on the company’s third-quarter performance. Revenues from Channel Development and EMEA is likely to decline nearly 14% and 12% to $465 million to $235 million, respectively.

Starbucks Corporation Price and EPS Surprise

What Does the Zacks Model Say

Our proven model does not conclusively predict 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 odds of an earnings beat. But that's not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Starbucks has a Zacks Rank #4 (Sell), its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combination

Here are some stocks from the Restaurant space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:

Dunkin' Brands Group, Inc. (NASDAQ:DNKN) has a Zacks Rank #2 and an Earnings ESP of +2.15%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wingstop Inc. (NASDAQ:WING) has a Zacks Rank #2 and an Earnings ESP of +5.62%.

Shake Shack, Inc. (NYSE:SHAK) has an Earnings ESP of +3.34% and a Zacks Rank #2.

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