Starbucks (SBUX) Q3 earnings report preview: what to look for

Coffeehouse chain Starbucks (NASDAQ:SBUX) will be reporting results this Thursday after the bell. Here’s what you need to know.

Starbucks beat analysts’ revenue expectations last quarter, reporting revenues of $9.32 billion, down 1.4% year on year. It was an exceptional quarter for the company, with an impressive beat of analysts’ same-store sales estimates and full-year EPS guidance exceeding analysts’ expectations.

Is Starbucks a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members.

This quarter, the market is expecting Starbucks’s revenue to decline 3.6% year on year, a reversal from the 5.5% increase it recorded in the same quarter last year.

Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. Starbucks has missed Wall Street’s revenue estimates multiple times over the last two years.

Looking at Starbucks’s peers in the restaurants segment, some have already reported their Q3 results, giving us a hint as to what we can expect. Domino's delivered year-on-year revenue growth of 3.4%, beating analysts’ expectations by 0.9%, and The Cheesecake Factory reported revenues up 13.9%, topping estimates by 2.7%. Domino's traded down 4.8% following the results.

Read our full analysis of Domino’s results here and The Cheesecake Factory’s results here.

There has been positive sentiment among investors in the restaurants segment, with share prices up 4.8% on average over the last month. Starbucks is up 8.2% during the same time and is heading into earnings with an average analyst price target of $109.93 (compared to the current share price of $103.04).

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