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Will ETFs Gain on Starbucks' Q3 Earnings Beat Amid Pandemic?
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Starbucks Corporation (SBUX - Free Report) released third-quarter fiscal 2021 results on Jul 27, after market close. The company’s earnings and revenues topped estimates. Moreover, the metrics rose year over year despite the pandemic. However, shares of Starbucks have declined about 2.9% since the earnings release, largely due to the company projecting slower recovery in its second-largest market — China. Starbucks has also narrowed both global and China same-store sales growth forecast for fiscal 2021.
Earnings in Detail
Starbucks reported adjusted earnings of $1.01 per share, surpassing the consensus mark of 77 cents. In the prior-year quarter, the company had reported adjusted loss per share of 46 cents. Notably, the bottom line surpassed the Zacks Consensus Estimate for the seventh straight quarter. Revenues rose nearly 77.6% year over year to around $7.50 billion and surpassed the Zacks Consensus Estimate of $7.24 billion. The upside was primarily driven by growth in comparable store sales, partially offset by the unfavorable impact of the pandemic.
Business Update
Starbucks opened 352 net new stores worldwide in the fiscal third quarter, taking the total tally to 33,295. Global store growth was 3% on a year-over-year basis.
Meanwhile, global comparable store sales rose 73% year over year. Global comps improved on a 75% increase in comparable transactions, marginally offset by a 1% decline in average ticket.
The company’s Active Starbucks Rewards loyalty program expanded to 24.2 million active members in the United States, up 48% on a year-over-year basis.
Guidance
Starbucks updated its fiscal 2021 GAAP earnings guidance. The company noted that fiscal year 2021 is a 53-week year instead of the normal 52 weeks. Management now projects global comparable sales growth between 20% and 21% for fiscal 2021 versus the previous estimate of 18-23%.
Moreover, Starbucks predicts consolidated revenues in the range of $29.1-$29.3 billion, inclusive of a $500-million impact attributable to the 53rd week, compared with the prior estimate of $28.5-$29.3 billion. Moreover, full-year adjusted earnings are projected in the range of $3.20-$3.25 compared with the prior estimate of $2.90-$3.00.
ETFs in Focus
Investors might want to take a look at a few ETFs, which have notable exposure to Starbucks and can cash in on the coffee giant’s earnings results:
iShares Evolved U.S. Consumer Staples ETF — 4.72% exposure to Starbucks
It is an actively-managed fund which employs data science techniques to identify companies with exposure to the consumer staples sector. The fund comprises 122 holdings. Its AUM is $15 million and expense ratio is 0.18%. The fund has lost around 0.9% since the coffee giant’s earnings release (read: Upbeat Coca-Cola Earnings Boosts These ETFs).
The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) — 3.69% exposure
The fund tracks the Consumer Discretionary Select Sector Index and comprises 63 holdings. The fund’s AUM is $19.98 billion and expense ratio is 0.12%. It has lost 0.3% since Starbucks’ earnings release (read: ETFs to Win on Strong US Consumer Confidence Levels in July).
This fund tracks the MSCI USA IMI Consumer Discretionary Index. Its AUM is $1.67 billion and expense ratio is 0.08%. However, it has lost around 0.06% since the coffee giant’s earnings release.
This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index. The fund’s AUM is $6.69 billion and expense ratio is 0.10%. The fund has declined 0.17% since Starbucks’ earnings release.
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Will ETFs Gain on Starbucks' Q3 Earnings Beat Amid Pandemic?
Starbucks Corporation (SBUX - Free Report) released third-quarter fiscal 2021 results on Jul 27, after market close. The company’s earnings and revenues topped estimates. Moreover, the metrics rose year over year despite the pandemic. However, shares of Starbucks have declined about 2.9% since the earnings release, largely due to the company projecting slower recovery in its second-largest market — China. Starbucks has also narrowed both global and China same-store sales growth forecast for fiscal 2021.
Earnings in Detail
Starbucks reported adjusted earnings of $1.01 per share, surpassing the consensus mark of 77 cents. In the prior-year quarter, the company had reported adjusted loss per share of 46 cents. Notably, the bottom line surpassed the Zacks Consensus Estimate for the seventh straight quarter. Revenues rose nearly 77.6% year over year to around $7.50 billion and surpassed the Zacks Consensus Estimate of $7.24 billion. The upside was primarily driven by growth in comparable store sales, partially offset by the unfavorable impact of the pandemic.
Business Update
Starbucks opened 352 net new stores worldwide in the fiscal third quarter, taking the total tally to 33,295. Global store growth was 3% on a year-over-year basis.
Meanwhile, global comparable store sales rose 73% year over year. Global comps improved on a 75% increase in comparable transactions, marginally offset by a 1% decline in average ticket.
The company’s Active Starbucks Rewards loyalty program expanded to 24.2 million active members in the United States, up 48% on a year-over-year basis.
Guidance
Starbucks updated its fiscal 2021 GAAP earnings guidance. The company noted that fiscal year 2021 is a 53-week year instead of the normal 52 weeks. Management now projects global comparable sales growth between 20% and 21% for fiscal 2021 versus the previous estimate of 18-23%.
Moreover, Starbucks predicts consolidated revenues in the range of $29.1-$29.3 billion, inclusive of a $500-million impact attributable to the 53rd week, compared with the prior estimate of $28.5-$29.3 billion. Moreover, full-year adjusted earnings are projected in the range of $3.20-$3.25 compared with the prior estimate of $2.90-$3.00.
ETFs in Focus
Investors might want to take a look at a few ETFs, which have notable exposure to Starbucks and can cash in on the coffee giant’s earnings results:
iShares Evolved U.S. Consumer Staples ETF — 4.72% exposure to Starbucks
It is an actively-managed fund which employs data science techniques to identify companies with exposure to the consumer staples sector. The fund comprises 122 holdings. Its AUM is $15 million and expense ratio is 0.18%. The fund has lost around 0.9% since the coffee giant’s earnings release (read: Upbeat Coca-Cola Earnings Boosts These ETFs).
The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) — 3.69% exposure
The fund tracks the Consumer Discretionary Select Sector Index and comprises 63 holdings. The fund’s AUM is $19.98 billion and expense ratio is 0.12%. It has lost 0.3% since Starbucks’ earnings release (read: ETFs to Win on Strong US Consumer Confidence Levels in July).
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) — 2.43% exposure
This fund tracks the MSCI USA IMI Consumer Discretionary Index. Its AUM is $1.67 billion and expense ratio is 0.08%. However, it has lost around 0.06% since the coffee giant’s earnings release.
Vanguard Consumer Discretionary ETF (VCR - Free Report) — 2.42% exposure
This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index. The fund’s AUM is $6.69 billion and expense ratio is 0.10%. The fund has declined 0.17% since Starbucks’ earnings release.