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4 Energy ETFs in Focus on Exxon Miss and Chevron Beat
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The energy sector continues to be the biggest drag on the overall S&P 500 earnings growth picture. Total earnings from 79.7% of the sector’s total market capitalization reported so far are down 76.5% on a 24.6% revenue decline. Surprises were also predominantly unimpressive with earnings and revenue beat ratios of 66.7% and 42.9%, respectively.
In particular, the biggest U.S. energy producers – Exxon Mobil (XOM - Free Report) and Chevron (CVX - Free Report) – posted substantial drops in year-over-year revenues. While both missed our revenue estimates, CVX beat on the bottom line thanks to its cost savings initiative (read: 5 ETFs for Those Who Believe the Oil Rally is Over).
Earnings in Focus
The largest U.S. oil company, Exxon Mobil, reported earnings per share of 41 cents, missing the Zacks Consensus Estimate of 64 cents and declining from the year-ago earnings of $1.00. The decline can be blamed on lower commodity prices and weaker refining margin. Total revenue plunged 22.1% year over year to $56.7 billion and was below our $59.8 billion estimate. Shares of XOM fell post earnings release.
In contrast, Chevron, managed to beat on the bottom line, thanks to its cost saving initiatives. Earnings per share came in at 49 cents, higher than the Zacks Consensus Estimate of 31 cents and the year-ago earnings of 30 cents. However, revenues dropped 27.4% year over year to $29.3 billion and were slightly below the Zacks Consensus Estimate of $29.8 billion. The stock declined post earnings release (see: all the energy ETFs here).
Investors should note that both stocks have a Zacks Rank #2 (Buy) with an encouraging VGM score of B. Additionally, these stocks fall in the solid Zacks Industry Rank in the top 14%, suggesting some smooth trading in the days ahead.
ETFs in Focus
Given this, we have highlighted four funds with the largest allocation to these energy behemoths that will be in focus over the coming days. These products have a miserable ETF Rank of 5 or ’Strong Sell’ rating, suggesting their underperformance in the coming days.
This ETF tracks the Dow Jones U.S. Oil & Gas Index, giving investors exposure to the broad energy space. It holds 78 stocks in its basket with AUM of $1.3 billion and average daily volume of more than 1.6 million shares. The product charges 44 bps in fees per year from investors. Exxon Mobil and Chevron occupy the top two positions in the basket taking the bigger chunk of assets at 23.3% and 14.3%, respectively. From a sector perspective, integrated oil & gas makes up for 41.9% share while oil exploration & production and oil equipment & services round off the next two spots with double-digit exposure each (read: Should You Play these Overvalued Sector ETFs?).
The fund follows the MSCI USA IMI Energy Index, holding 124 stocks in its basket. Out of these, XOM and CVX take the top two spots at 25.4% and 13.3%, respectively. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 83% of the portfolio while energy equipment & services takes the remainder. The product charges 8 bps in annual fees and trades in good volume of about 187,000 shares. It has accumulated $429.9 million in its asset base.
This fund manages over $3.9 billion in asset base and provides exposure to a basket of 138 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. The product sees solid volume of about 375,000 shares and charges 10 bps in annual fees. Exxon and Chevron are the top firms with 23.1% and 13.1% allocation, respectively. Though the product is skewed toward the integrated oil & gas sector with 39.7% of assets, oil exploration and production, and oil equipment services have a nice mix in the portfolio with double-digit exposure each (read: Fidelity Slashes Fees for 11 Sector ETFs).
This is the largest and most popular ETF in the energy space with AUM of $13.7 billion and average daily volume of around 18.6 million shares per day. Expense ratio comes in at 0.14%. The fund follows the Energy Select Sector Index and holds 39 securities in its basket. Here again, XOM and CVX occupy the top two spots with 18.7% and 14.8% share, respectively. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 82.8% of the portfolio while energy equipment & services takes the remainder.
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4 Energy ETFs in Focus on Exxon Miss and Chevron Beat
The energy sector continues to be the biggest drag on the overall S&P 500 earnings growth picture. Total earnings from 79.7% of the sector’s total market capitalization reported so far are down 76.5% on a 24.6% revenue decline. Surprises were also predominantly unimpressive with earnings and revenue beat ratios of 66.7% and 42.9%, respectively.
In particular, the biggest U.S. energy producers – Exxon Mobil (XOM - Free Report) and Chevron (CVX - Free Report) – posted substantial drops in year-over-year revenues. While both missed our revenue estimates, CVX beat on the bottom line thanks to its cost savings initiative (read: 5 ETFs for Those Who Believe the Oil Rally is Over).
Earnings in Focus
The largest U.S. oil company, Exxon Mobil, reported earnings per share of 41 cents, missing the Zacks Consensus Estimate of 64 cents and declining from the year-ago earnings of $1.00. The decline can be blamed on lower commodity prices and weaker refining margin. Total revenue plunged 22.1% year over year to $56.7 billion and was below our $59.8 billion estimate. Shares of XOM fell post earnings release.
In contrast, Chevron, managed to beat on the bottom line, thanks to its cost saving initiatives. Earnings per share came in at 49 cents, higher than the Zacks Consensus Estimate of 31 cents and the year-ago earnings of 30 cents. However, revenues dropped 27.4% year over year to $29.3 billion and were slightly below the Zacks Consensus Estimate of $29.8 billion. The stock declined post earnings release (see: all the energy ETFs here).
Investors should note that both stocks have a Zacks Rank #2 (Buy) with an encouraging VGM score of B. Additionally, these stocks fall in the solid Zacks Industry Rank in the top 14%, suggesting some smooth trading in the days ahead.
ETFs in Focus
Given this, we have highlighted four funds with the largest allocation to these energy behemoths that will be in focus over the coming days. These products have a miserable ETF Rank of 5 or ’Strong Sell’ rating, suggesting their underperformance in the coming days.
iShares U.S. Energy ETF (IYE - Free Report)
This ETF tracks the Dow Jones U.S. Oil & Gas Index, giving investors exposure to the broad energy space. It holds 78 stocks in its basket with AUM of $1.3 billion and average daily volume of more than 1.6 million shares. The product charges 44 bps in fees per year from investors. Exxon Mobil and Chevron occupy the top two positions in the basket taking the bigger chunk of assets at 23.3% and 14.3%, respectively. From a sector perspective, integrated oil & gas makes up for 41.9% share while oil exploration & production and oil equipment & services round off the next two spots with double-digit exposure each (read: Should You Play these Overvalued Sector ETFs?).
Fidelity MSCI Energy Index ETF (FENY - Free Report)
The fund follows the MSCI USA IMI Energy Index, holding 124 stocks in its basket. Out of these, XOM and CVX take the top two spots at 25.4% and 13.3%, respectively. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 83% of the portfolio while energy equipment & services takes the remainder. The product charges 8 bps in annual fees and trades in good volume of about 187,000 shares. It has accumulated $429.9 million in its asset base.
Vanguard Energy ETF (VDE - Free Report)
This fund manages over $3.9 billion in asset base and provides exposure to a basket of 138 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. The product sees solid volume of about 375,000 shares and charges 10 bps in annual fees. Exxon and Chevron are the top firms with 23.1% and 13.1% allocation, respectively. Though the product is skewed toward the integrated oil & gas sector with 39.7% of assets, oil exploration and production, and oil equipment services have a nice mix in the portfolio with double-digit exposure each (read: Fidelity Slashes Fees for 11 Sector ETFs).
Energy Select Sector SPDR (XLE - Free Report)
This is the largest and most popular ETF in the energy space with AUM of $13.7 billion and average daily volume of around 18.6 million shares per day. Expense ratio comes in at 0.14%. The fund follows the Energy Select Sector Index and holds 39 securities in its basket. Here again, XOM and CVX occupy the top two spots with 18.7% and 14.8% share, respectively. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 82.8% of the portfolio while energy equipment & services takes the remainder.
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