U.S. Markets closed

ETFs in Focus on Starbucks' Solid Q4 Earnings Report

Sweta Jaiswal, FRM

Starbucks Corporation SBUX released fourth-quarter fiscal 2019 results after market close on Oct 30, with earnings matching estimates and revenues surpassing the same. Following the earnings release, shares of Starbucks gained almost 3% in after-hour trading.

Earnings in Focus

Starbucks reported adjusted earnings of 70 cents per share, meeting the consensus mark but improving 12.9% from the year-ago quarter. Revenues grew nearly 7% year over year to $6.75 billion, beating the Zacks Consensus Estimate by 1.1%.

Strength in the Americas and China-Asia-Pacific segments and store openings drove the company’s performance in the reported quarter. The company’s efforts to deliver enhanced customer experience, launch beverages and broaden digital customer relationships have been driving results. In fact, Starbucks saw strong demand for new beverages in the United States and China. Notably, comparable sales from China increased for the fifth straight quarter (read: ETFs in Focus as US Consumer Confidence Drops in October).

Starbucks expects GAAP EPS in the range of $2.84-$2.89. Also, non-GAAP EPS is estimated within $3.00-$3.05. Moreover, consolidated GAAP revenue growth is projected within 6-8%.

Business Update

Starbucks opened 630 net stores worldwide, taking the total tally to 31,256. Global store growth was 7% on a year-over-year basis.

Moreover, global comparable store sales increased 5%. Global comps were driven by a 3% rise in average ticket and 2% improvement in comparable transactions.

The company’s Active Starbucks Rewards loyalty program expanded to 17.6 million active members in the United States, up 15% on a year-over-year basis.

ETFs in Focus

Investors might want to take a look at some consumer discretionary ETFs which have notable exposure to Starbucks and can cash in on the coffee giant’s stellar earnings results (see: all the Consumer Discretionary ETFs here):

Invesco Dynamic Leisure and Entertainment ETF PEJ — 4.39% exposure

The fund tracks the Dynamic Leisure and Entertainment Intellidex Index, which comprises stocks of U.S. leisure and entertainment companies. The index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors. The fund comprises 30 holdings with Starbucks occupying the seventh position. Its AUM is $52.7 million and expense ratio is 0.63%. The fund carries a Zacks ETF Rank #3 (Hold) with a High risk outlook.

Invesco Dynamic Food & Beverage ETF PBJ — 4.46% exposure

The fund tracks the Dynamic Food & Beverage Intellidex Index comprising stocks of 30 U.S. food and beverage companies. These are companies that are principally engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies. The fund comprises 30 holdings with Starbucks occupying the seventh spot. Its AUM is $70.9 million and expense ratio is 0.63%. The fund carries a Zacks ETF Rank #3 with a Medium risk outlook (read: ETFs & Stocks to Defy Weak September Retail Sales).

iShares Evolved U.S. Consumer Staples ETF IECS — 4.03% exposure

It is an actively managed fund which employs data science techniques to identify companies with exposure to the consumer staples sector. The fund comprises 123 holdings with Starbucks occupying the eighth spot. Its AUM is $8.3 million and expense ratio is 0.18%.

Consumer Discretionary Select Sector SPDR Fund XLY — 4.31% exposure

The fund tracks the Consumer Discretionary Select Sector Index and comprises 64 holdings. Starbucks sits at the fifth spot. The fund’s AUM is $14.42 billion and expense ratio is 0.13%. It carries a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Antitrust Probe Likely to Hit These Tech ETFs).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Click to get this free report Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports Consumer Discretionary Select Sector SPDR Fund (XLY): ETF Research Reports Invesco Dynamic Food & Beverage ETF (PBJ): ETF Research Reports Starbucks Corporation (SBUX) : Free Stock Analysis Report iShares Evolved U.S. Consumer Staples ETF (IECS): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report