Starbucks' Q3 Earnings Top Amid Coronavirus Crisis: ETFs to Gain

Starbucks’ Q3 Earnings Top Amid Coronavirus Crisis: ETFs to Gain

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Starbucks Corporation SBUX released third-quarter fiscal 2020 results, after market close on Jul 28. The company’s earnings and revenues topped estimates but sharply declined year over year. Notably, shares of Starbucks have gained 3.7% since the earnings release as investors cheered the encouraging results.

Earnings in Focus

Starbucks reported adjusted loss of 46 cents per share compared with the consensus mark of a loss per share of 61 cents. In the prior-year quarter, the company had reported adjusted earnings per share of 78 cents. Revenues also declined nearly 38.1% year over year to nearly $4.22 billion but outpaced the Zacks Consensus Estimate of $4.11 billion. Starbucks also informed that due to the coronavirus pandemic, it lost nearly $3.1 billion in consolidated revenues. The downside was primarily caused by store closures, limited sales channels, reduced operating hours and dismal customer traffic.

Meanwhile, the coffee giant is gaining from robust drive-thru and deliver options. Mobile ordering in the third quarter rose 6 percentage points from a year ago and accounted for 22% of total transactions.

Business Update

Starbucks opened 130 net stores worldwide, taking the total tally to 32,180. Global store growth was 5% on a year-over-year basis.

Meanwhile, global comparable store sales fell 40%. Global comps declined due to a 51% decrease in comparable transactions, marginally offset by a 23% increase in average ticket.

The company’s Active Starbucks Rewards loyalty program contracted to 16.3 million active members in the United States, down 5% on a year-over-year basis. Temporary store closures along with other coronavirus pandemic effects led to a decline in customer frequency which caused the downside in the active members under the loyalty program.

ETFs in Focus

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

Consumer Discretionary Select Sector SPDR Fund XLY — 3.93% exposure to Starbucks

The fund tracks the Consumer Discretionary Select Sector Index and comprises 61 holdings. Starbucks sits at the sixth spot. The fund’s AUM is $14.42 billion and expense ratio is 0.13%. The fund has gained 1% since Starbucks’ earnings release (read: Retail Sales Returning to Pre-COVID 19 Level: Best ETF Areas).

iShares Evolved U.S. Consumer Staples ETF IECS — 3.8% 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 124 holdings, with Starbucks occupying the eighth spot. Its AUM is $9.9 million and expense ratio is 0.18%. The fund has increased 0.7% since the coffee giant’s earnings release (read: Coke, PepsiCo Earnings Should Help Staples ETFs).

Vanguard Consumer Discretionary ETF VCR — 2.6% exposure

This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index. Starbucks takes the seventh spot. The fund’s AUM is $3.43 billion and expense ratio is 0.10%. The fund has gained 1.5% since Starbucks’ earnings release (read: Will Coronavirus Vaccine Optimism Drive These ETFs?).

Fidelity MSCI Consumer Discretionary Index ETF FDIS — 2.4% exposure

This fund tracks the MSCI USA IMI Consumer Discretionary Index. Starbucks sits at the seventh spot. The fund’s AUM is $869.3 million and expense ratio is 0.08%. However, it has gained 1.3% since the coffee giant’s earnings release.

Soure: Nasdaq

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