Starbucks Corporation (NASDAQ:SBUX) came out with its Q1 fiscal 2019 results after close of trading hours on Jan 24 and delighted investors by beating both earnings and revenue estimates.
Earnings in Focus
Starbucks reported earnings of 75 cents per share, beating the Zacks Consensus Estimate by 10 cents and increasing 15.4% from the year-ago quarter. Revenues grew nearly 8.2% year over year to $6.6 billion and surpassed the Zacks Consensus Estimate of $6.48 billion.
Starbucks has raised its guidance for fiscal 2019 earnings. Non-GAAP EPS is expected in the range of $2.68-$2.73, above the previous guidance of $2.61-$2.66. The Zacks Consensus Estimate for fiscal 2019 earnings is currently pegged at $2.62.
Kevin Johnson, president and CEO of Starbucks, was very pleased with the sequential improvement in quarterly comparable store transactions in the United States. Though the number of transactions in the United States remained flat, Starbucks reported same-store sales growth of 4%, buoyed by a 3% increase in average ticket size.
Starbucks opened 541 new stores in Q1, taking the tally of stores to 29,865, up 7% from the year-ago quarter. The company’s Rewards loyalty program grew to 16.3 million active members in the United States, up 14% on a year-over-year basis.
Johnson said that the company is changing the loyalty program so that customers can earn and redeem rewards more quickly and across a broader range of products. In Q1, Starbucks returned $5.5 billion to its shareholders through a combination of share repurchases and dividends.
Market Impact
Following the earnings announcement, shares of Starbucks rose about 2% in aftermarket hours. The stock currently has a Zacks Rank #3 (Hold) and VGM Score of A. However, Starbucks belongs to a bottom-ranked Zacks industry (bottom 39%).
ETFs in Focus
The expected gains in the company’s stock will spread into the ETF world, especially funds that have higher allocation to this coffee giant. Below we highlight them in detail (see: all the Consumer Discretionary ETFs here):
Invesco Dynamic Leisure and Entertainment ETF PEJ—5.3% 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 29 holdings with Starbucks occupying the second spot. Its AUM is $119.8 million and expense ratio is 0.63%. The fund carries a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: Brexit Draft Deal Makes These Sector ETFs a Must-See).
Invesco Dynamic Food & Beverage ETF PBJ—5.2% 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 second spot. Its AUM is $67.7 million and expense ratio is 0.63%. The fund carries a Zacks ETF Rank #4 with a Medium risk outlook.
iShares Evolved U.S. Consumer Staples ETF IECS—4.3% 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 129 holdings with Starbucks occupying the seventh spot. Its AUM is $3.6 million and expense ratio is 0.18% (read: U.S. Consumer Sentiment Hit by Shutdown: ETFs in Focus).
Consumer Discretionary Select Sector SPDR Fund (V:XLY) —4% exposure
The fund tracks the Consumer Discretionary Select Sector Index and comprises 65 holdings. Starbucks sits at the sixth spot. The fund’s AUM is $12.0 billion and expense ratio is 0.13%. It carries a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
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Invesco Dynamic Food & Beverage ETF (PBJ): ETF Research Reports
Consumer Discretionary Select Sector SPDR Fund (XLY): ETF Research Reports
Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports
Starbucks Corporation (SBUX): Get Free Report
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