On November 3, investors will find out if Starbucks's (SBUX) domestic business is growing as fast as the company has said it would just last month.
Starbucks management has told investors that comps would accelerate toward the 5% level in its fiscal fourth-quarter, which would be in line with consensus estimates. William Blair analyst Sharon Zackfia, who rates Starbucks outperform, said 4% is already priced into the stock, but with shares having come under pressure in recent months, a 3% or 6% figure would be a "real surprise."
Shares of Starbucks have gained 10% since the start of the year and 15% over the past year, as investor concerns about slowing growth have raised questions.
Seattle-based Starbucks has depended on strong same-stores-sales growth, as it continues to expand its retail footprint. It's reinvesting back in its business with initiatives like raising worker compensation, adding new products and innovating, particularly in technology, where its Starbucks app is consistently cited as a leader in mobile pay technology.
On this front, RBC Capital Markets analyst David Palmer wrote that he will be looking to see if the company's recently announced deal with Chase Visa will "help re-accelerate digital loyalty transactions." Palmer has a $64 price target and a outperform rating on Starbucks.Analysts surveyed by Yahoo! Finance expect Starbucks to earn 55 cents a share on $5.68 billion in revenue.
These three ETFs may benefit if investors like what the Seattle-based coffee maker has to say about the past 90 days.
Consumer Discretionary Select Sector SPDR Fund ETF
Starbucks accounts for 3.37% of the Consumer Discretionary Select Sector SPDR Fund ETF (XLY) , which has $9.26 billion in assets under management and sports a 0.15% expense ratio.
In a recent survey, BMO Capital Markets analyst Andrew Strelzik noted that data for the period ending Sept. 25 showed that consumer packaged goods from Starbucks rose at a 4.6% clip over the last four and 12 week periods, but noted it was below the historical average, as single serve sales growth have underperformed, but ground coffee sales outperformed.
Vanguard Consumer Discretionary ETF
The Vanguard Consumer Discretionary ETF (VCR) has Starbucks make up 2.75% of its $1.89 billion portfolio and charges investors a 0.12% expense ratio.
In addition to an outlook on the digital front, RBC's Palmer will be looking to hear about the company's sales growth, noting his proprietary consumer panel implied between four and six percent growth.
iShares U.S. Consumer Services ETF
Starbucks makes up 2.75% of the $848.9 million iShares U.S. Consumer Services ETF (IYC) and charges investors a 0.43% expense ratio.William Blair's Zackfia expects to hear more about the guidance for the December quarter, which may temper investor enthusiasm, as it saw 9% growth in the Americas last year. "All told, we project a consolidated comp increase of 5% against an 8% comparison, in line with consensus as well as guidance," Zackfia wrote in a note to clients.