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Starbucks ETFs That Suffered on Mixed Q1 Earnings Report

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Starbucks Corporation (SBUX - Free Report) released mixed first-quarter fiscal 2020 results, after market close on Jan 28. The company’s earnings beat estimates but revenues missed the same. Following the release, shares of Starbucks declined 1.8% in after-hour trading session.

Earnings in Focus

Starbucks reported adjusted earnings of 79 cents per share, beating the consensus mark of 76 cents and improving 5.3% from the year-ago quarter. Revenues grew nearly 7% year over year to $7.097 billion, marginally missing the Zacks Consensus Estimate of $7.10 billion.

Strength in the Americas and international 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. Notably, comparable sales from China increased for the sixth straight quarter (read: 5 ETFs to Ride on Higher Consumer Confidence).

Starbucks expects GAAP EPS in the band 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%.

However, Starbucks’ business in China is likely to be impacted by the coronavirus outbreak. Per the company, fiscal 2020 guidance will be updated, once the impact of coronavirus is estimated. In fact, out of its 4300 outlets in China, Starbucks has closed 2000 (read: Will Consumer Discretionary ETFs Suffer the Coronavirus Blow?).

Business Update

Starbucks opened 539 net stores worldwide, taking the total tally to 31,795. Global store growth was 6% 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 18.9 million active members in the United States, up 16% 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):

Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) — 4.34% exposure to Starbucks

The fund tracks the Consumer Discretionary Select Sector Index and comprises 64 holdings. Starbucks sits at the fifth spot. The fund’s AUM is $15.57 billion and expense ratio is 0.13%. It carries a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. The fund has lost 0.06% since Starbucks’ fiscal first-quarter earnings release (read: Should You Buy Amazon ETFs Ahead of Q4 Earnings?).

iShares Evolved U.S. Consumer Staples ETF  — 4.08% 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 131 holdings with Starbucks occupying the eighth spot. Its AUM is $8.7 million and expense ratio is 0.18%. The fund has lost 0.4% since Starbucks’ earnings release.

Vanguard Consumer Discretionary ETF (VCR - Free Report) — 3.3% exposure

This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index. Starbucks sits at the fifth spot. The fund’s AUM is $3.11 billion and expense ratio is 0.10%. It carries a Zacks ETF Rank #2 with a Medium risk outlook. The fund has lost 0.05% since the release of Starbucks’ earnings report.

Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) — 3.3% exposure

This fund tracks the MSCI USA IMI Consumer Discretionary Index. Starbucks sits at the fifth spot. The fund’s AUM is $766.4 million and expense ratio is 0.08%. It carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. However, the fund could gain only 0.06% since Starbucks’ earnings release.

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