Starbucks earnings preview: McDonald's premium coffee troubles imply even worse problems for SBUX

Perhaps it is too obvious to spend much time on, but sales of premium coffee are not going very well at McDonald's (NYSE: MCD). A recession will do that. According to The Wall Street Journal, "The weak economy has prompted some consumers to brew coffee at home instead of buying it at coffee shops."

McDonald's will be just fine. In its most recent earnings report, same-store sales were up an impressive amount in every region of the world. If its new coffee plans fail, why should anyone care? At $53, its shares have done better than most.

The less obvious message to be taken from the McDonald's trouble is that Starbucks (NASDAQ: SBUX) is likely to have its worse quarter ever and its stock is about to get hammered into the ground. Unlike McDonald's, expensive coffee and food is all its sells. Trading under $10, Starbucks is near a 52-week low, down from a period high to $26.75.

Wall Street expects Q3 EPS at Starbucks to come at 14 cents. Don't believe it. The figure is likely to be much worse than that and the company's shares could trade down to $6.

Douglas A. McIntyre is an editor at 24//7 Wall St.