Tag Archives: apple

Did Restaurant Earnings Impact This New ETF?

With the introduction of the new Restaurant ETF (NASDAQ: BITE ) at the end of last month, time has come to evaluate the impact of the recent spate of restaurant industry earnings on it. Most of the restaurant stocks delivered better-than-expected earnings and rising same-store sales (comps) in the last reported quarter. The upbeat results definitely speak about the strong fundamentals of the industry. Low fuel cost, an improving U.S. economy, rising consumer confidence, higher consumer spending and better job prospects all bode well for the restaurant industry. Let us take a quick glance at some of these results. Restaurant Earnings in Detail McDonald’s Corporation (NYSE: MCD ) posted earnings per share of $1.40 for the third quarter that beat the Zacks Consensus Estimate of $1.27 by 10%. Earnings, in constant currencies, grew 44% year over year driven by decline in total costs and expenses and a lower share count. Revenues of $6.62 billion declined 5% year over year due to currency headwinds but grew 7% in constant currencies, beating the Zacks Consensus Estimate by 2.7%. This was driven by comps growth at all its segments. The maker of hamburgers and fries expects comps to grow in the fourth quarter as well. Starbucks Corporation’s (NASDAQ: SBUX ) adjusted earnings of 43 cents per share in the fourth quarter of fiscal 2015 missed the Zacks Consensus Estimate of 44 cents by 2.3%. However, earnings were on the higher end of management’s guided range and grew 16% year over year as solid top-line growth offset lower margins. Sales rose 18% to $4.91 billion, outpacing the Zacks Consensus Estimate of $4.89 billion by 0.5% driven by robust comps. Global comps growth of 8% was higher than a 7% rise in the previous quarter, driven by increased traffic trends. The company expects revenues to grow more than 10% in fiscal 2016, excluding the extra 53rd week. Comps are expected to grow somewhat above the mid-single-digit range. Buffalo Wild Wings Inc.’s (NASDAQ: BWLD ) third-quarter results were disappointing. The restaurant operator’s adjusted earnings of $1.00 per share fell 12.2% year over year and were short of the Zacks Consensus Estimate of $1.28 by 22% owing to higher food and labor costs. Despite a 22% increase, the company’s revenues of $455.5 million missed the consensus estimate by roughly 1.8%. It also expects single-digit net earnings growth for 2015 compared with 13% growth expected previously. The Wendy’s Company’s (NASDAQ: WEN ) adjusted earnings came in at 9 cents per share, exceeding the Zacks Consensus Estimate by 12.5% and year-ago earnings by 28.6% driven by lower expenses and improved margins. Total revenue of $464.6 million beat the consensus mark of $442.0 million by 5% but declined 6.5% from the prior year. The company marginally revised its earnings, EBITDA and comps guidance for 2015 on the basis of strong year-to-date operating results and encouraging response to the 4 for $4 promotion that began in October. ETF Impact Strong results notwithstanding, the performance of restaurant stocks has not been commensurate due to several headwinds like the threat of higher labor costs due to demand for rising minimum wages, price wars, strong currency and a slowdown in the Chinese economy. This found a reflection in the performance of BITE, which exclusively focuses on this industry. The fund has tumbled 5.8% since its launch (as of November 12, 2015). Except McDonald’s and Starbucks, nearly all the stocks in the fund’s top 10 holdings nosedived in the past one month. Investors, therefore, should exercise caution before hopping into this niche ETF and closely monitor its price movements in the coming days. Let us take a look at this ETF in greater detail. BITE tracks the BITE Index, which is an equal-weighted index comprising 45 publicly-traded companies in the U.S. The fund’s holdings include some of the renowned companies in the restaurant industry that operates a broad variety of restaurant formats raging from quick serve and fast casual to casual dining and fine dining. The fund’s top five holdings include McDonald’s, Starbucks, Carrols Restaurant Group Inc. (NASDAQ: TAST ), Chuy’s Holdings, Inc. (NASDAQ: CHUY ) and Ruth’s Hospitality Group Inc. (NASDAQ: RUTH ). Together, the top 10 holdings occupy 27.6% of the fund’s assets. BITE has net assets worth $2.4 million and is thinly traded with an average volume of around 5,000 shares per day. The fund is a bit expensive with 0.75% in expense ratio. Original Post

Don’t Forget These International Small-Cap Dividend ETFs

Summary Roughly $2 of every $3 that flowed into U.S.-listed ETFs this year have gone into a strategic beta fund, and those inflows are being led by currency hedged funds. Favored developed markets such as Europe and Japan underscore the opportunities some investors have missed out on by ignoring international small-cap dividend ETFs. DFE is not a dedicated eurozone ETF, as British and Swedish stocks combine for over 40 percent of the ETF’s geographic weight. By Todd Shriber , ETF Professor Smart or strategic beta exchange-traded funds have enjoyed another banner of asset-gathering proficiency. By some estimates, roughly $2 of every $3 that flowed into U.S.-listed ETFs this year have gone into a strategic beta fund, and those inflows are being led by currency hedged funds. But, as is often the case with U.S.-focused ETFs, investors have displayed a large-cap bias when selecting developed market funds this year, glossing over some potent international small-cap dividend ETFs along the way. “But the vast majority of assets in international equity ETFs-and the vast majority of net inflows this year-has been concentrated primarily in developed world large-cap strategies. While equity returns for the MSCI Europe and MSCI Japan indexes have, thus far in 2015, exceeded those generated by the S&P 500 Index, the bigger bull market has actually occurred in the smaller-company segment of the developed world,” said WisdomTree (NASDAQ: WETF ) Chief Investment Strategist Luciano Siracusano in a note out Monday. Favorites Overshadow Other ETFs Favored developed markets such as Europe and Japan underscore the opportunities some investors have missed out on by ignoring international small-cap dividend ETFs. For example, the $976.7 million WisdomTree Europe SmallCap Dividend Fund (NYSEARCA: DFE ) , as of the end of October, had a year-to-date gain of 11.1 percent, according to WisdomTree data. That was more than 30 basis points better than MSCI Europe Small Cap Index and more than seven times better than the MSCI Europe Index, according to WisdomTree data . DFE is not a dedicated eurozone ETF, as British and Swedish stocks combine for over 40 percent of the ETF’s geographic weight. Though it is not a currency hedged ETF, the $354.2 million WisdomTree Japan SmallCap Dividend ETF (NYSEARCA: DFJ ) is another example of an international small-cap dividend ETF that has shined in 2015. As of the end of October, DFJ was up 15.3 percent this year, topping the MSCI Japan Index by 500 basis points and the MSCI Japan Small Cap Index by about 240 basis points. Not surprisingly, currency hedging has also worked with Japanese small-caps, such as the WisdomTree Japan Hedged SmallCap Equity ETF (NASDAQ: DXJS ) , has surged nearly 18 percent. DXJS has taken in $81.1 million of its $196.4 million in assets since the start of this year. Explaining The Divergence In Returns “What accounts for the divergence in returns? Part of it can be explained by sector concentrations, country and currency exposure. Another reason: Small-cap stocks are less tied to the global economy and often more sensitive to inflections in local economies. This can be partly explained by the historic tendency of small-company stocks to outperform large caps,” added Siracusano. A Final Fund Idea The WisdomTree Europe Hedged SmallCap Equity Fund (NYSEARCA: EUSC ) is another example of an international small-cap ETF worthy of more attention. Though it is up just two-thirds of a percent this year, EUSC has raked in almost $240 million in assets under management since coming to market in early March, making it one of this year’s most successful new ETFs. Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.