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Transport ETFs in Focus on Spate of Dismal Q3 Earnings Reports
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The third-quarter earnings picture for the transportation sector has been dismal so far. This is especially true as total earnings for the sector that have been reported so far are down 117.1% on 28.6% lower revenues. It reflects continued operating woes of the airline space, which has been hit hard by the COVID-19 pandemic (see: all the Industrials ETFs here).
For a better understanding, let’s delve into the results of some well-known industry players:
Transportation Earnings in Brief
The world's largest package delivery company United Parcel Service (UPS - Free Report) topped the estimates on both revenues and earnings. Earnings of $2.28 per share were 42 cents ahead of the consensus mark and the top line of $21.24 billion was above the estimated $20.08 billion.
Major railroads Union Pacific (UNP - Free Report) , Kansas City Southern and Norfolk Southern Corp (NSC - Free Report) posted a mixed bag. Union Pacific missed on earnings by couple of cents and revenues by $64 million while Kansas City surpassed on earnings by 8 cents and missed on revenues by $3 million. Meanwhile, Norfolk Southern beat the consensus mark on earnings per share by 15 cents and lagged on revenues by $20 million (read: ETF Areas to Gain From the Holiday Shopping Season).
Ryder Systems (R - Free Report) , the leader in supply chain management and fleet management services, beat earnings estimates by $1.64 per share and revenue estimates by $149 million.
U.S. airlines Delta Air Lines (DAL - Free Report) and United Continental (UAL - Free Report) delivered worse-than-expected results. Delta incurred a loss of $3.30 per share, wider than the Zacks Consensus Estimate of a loss of $3.14. Revenues of $3.06 billion also fell shy of the consensus mark of $3.09 billion. United Continental posted a loss of $8.16 per share, wider than the Zacks Consensus Estimate of a loss of $7.63 and revenues of $2.49 billion were below the estimated $2.57 billion.
Last but not the least, leading trucking carrier J.B. Hunt (JBHT - Free Report) lagged on earnings by 8 cents per share but beat revenues by $127 million.
ETFs in Focus
The overall dismal earnings led to rough trading in transport ETFs over the past month. As such, iShares Dow Jones Transportation Average Fund (IYT - Free Report) , SPDR S&P Transportation ETF (XTN - Free Report) and First Trust Nasdaq Transportation ETF (FTXR - Free Report) have shed 2.7%, 1.9% and 1.6%, respectively. All these products currently have a Zacks ETF Rank #3 (Hold).
IYT
The fund tracks the Dow Jones Transportation Average Index, giving investors exposure to a small basket of 20 securities. The in-focus eight firms make up for a combined 46.7% share. From a sector perspective, railroads, and air freight & logistics take the largest share with 33.1% and 27.6% share, respectively, while airlines and trucking round off the next two spots with a double-digit exposure each. The fund has accumulated $1.2 billion in AUM and sees a solid trading volume of around 285,000 shares a day. It charges 42 bps in annual fees (read: Transport ETF Hits New 52-Week High).
XTN
This fund tracks the S&P Transportation Select Industry Index, holding 42 stocks in its basket. The in-focus firms account for not more than 3.2% share each. Further, 33.6% of the portfolio is dominated by trucking while airlines take around one-fourth share. With AUM of $284.3 million, the fund charges 35 bps in fees per year from investors and trades in a lower volume of around 62,000 shares a day.
FTXR
This fund offers exposure to the 31 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. The in-focus eight firms represent a combined 23.2% share. Ground freight & logistics takes the top spot at 34.5% while auto & truck manufacturers, auto, truck & motorcycle parts, airlines, and air freight & courier services round off the next spots with a double-digit exposure each. FTXR has amassed $634.4 million in its asset base and charges 60 bps in annual fees. The average trading volume amounts to a modest 332,000 shares.
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Transport ETFs in Focus on Spate of Dismal Q3 Earnings Reports
The third-quarter earnings picture for the transportation sector has been dismal so far. This is especially true as total earnings for the sector that have been reported so far are down 117.1% on 28.6% lower revenues. It reflects continued operating woes of the airline space, which has been hit hard by the COVID-19 pandemic (see: all the Industrials ETFs here).
For a better understanding, let’s delve into the results of some well-known industry players:
Transportation Earnings in Brief
The world's largest package delivery company United Parcel Service (UPS - Free Report) topped the estimates on both revenues and earnings. Earnings of $2.28 per share were 42 cents ahead of the consensus mark and the top line of $21.24 billion was above the estimated $20.08 billion.
Major railroads Union Pacific (UNP - Free Report) , Kansas City Southern and Norfolk Southern Corp (NSC - Free Report) posted a mixed bag. Union Pacific missed on earnings by couple of cents and revenues by $64 million while Kansas City surpassed on earnings by 8 cents and missed on revenues by $3 million. Meanwhile, Norfolk Southern beat the consensus mark on earnings per share by 15 cents and lagged on revenues by $20 million (read: ETF Areas to Gain From the Holiday Shopping Season).
Ryder Systems (R - Free Report) , the leader in supply chain management and fleet management services, beat earnings estimates by $1.64 per share and revenue estimates by $149 million.
U.S. airlines Delta Air Lines (DAL - Free Report) and United Continental (UAL - Free Report) delivered worse-than-expected results. Delta incurred a loss of $3.30 per share, wider than the Zacks Consensus Estimate of a loss of $3.14. Revenues of $3.06 billion also fell shy of the consensus mark of $3.09 billion. United Continental posted a loss of $8.16 per share, wider than the Zacks Consensus Estimate of a loss of $7.63 and revenues of $2.49 billion were below the estimated $2.57 billion.
Last but not the least, leading trucking carrier J.B. Hunt (JBHT - Free Report) lagged on earnings by 8 cents per share but beat revenues by $127 million.
ETFs in Focus
The overall dismal earnings led to rough trading in transport ETFs over the past month. As such, iShares Dow Jones Transportation Average Fund (IYT - Free Report) , SPDR S&P Transportation ETF (XTN - Free Report) and First Trust Nasdaq Transportation ETF (FTXR - Free Report) have shed 2.7%, 1.9% and 1.6%, respectively. All these products currently have a Zacks ETF Rank #3 (Hold).
IYT
The fund tracks the Dow Jones Transportation Average Index, giving investors exposure to a small basket of 20 securities. The in-focus eight firms make up for a combined 46.7% share. From a sector perspective, railroads, and air freight & logistics take the largest share with 33.1% and 27.6% share, respectively, while airlines and trucking round off the next two spots with a double-digit exposure each. The fund has accumulated $1.2 billion in AUM and sees a solid trading volume of around 285,000 shares a day. It charges 42 bps in annual fees (read: Transport ETF Hits New 52-Week High).
XTN
This fund tracks the S&P Transportation Select Industry Index, holding 42 stocks in its basket. The in-focus firms account for not more than 3.2% share each. Further, 33.6% of the portfolio is dominated by trucking while airlines take around one-fourth share. With AUM of $284.3 million, the fund charges 35 bps in fees per year from investors and trades in a lower volume of around 62,000 shares a day.
FTXR
This fund offers exposure to the 31 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. The in-focus eight firms represent a combined 23.2% share. Ground freight & logistics takes the top spot at 34.5% while auto & truck manufacturers, auto, truck & motorcycle parts, airlines, and air freight & courier services round off the next spots with a double-digit exposure each. FTXR has amassed $634.4 million in its asset base and charges 60 bps in annual fees. The average trading volume amounts to a modest 332,000 shares.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>