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Energy ETFs in Focus Post Exxon, Chevron's Weak Q1 Earnings
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Two energy behemoths — Exxon Mobil Corp. (XOM - Free Report) and Chevron Corp. (CVX - Free Report) — reported disappointing first-quarter 2024 results. Both companies lagged estimates on revenues, while Chevron managed to beat earnings estimates. Lower gas prices and narrowing refining margins took a toll on their profits.
XOM shares fell 2.8% at the close on the day following the earnings announcement, while CVX gained a modest 0.4%. This has put the focus on energy ETFs like Energy Select Sector SPDR (XLE - Free Report) , Vanguard Energy ETF (VDE - Free Report) , iShares U.S. Energy ETF (IYE - Free Report) , Fidelity MSCI Energy Index ETF (FENY - Free Report) and Strive U.S. Energy ETF (DRLL - Free Report) , with the largest allocation to the energy behemoths (read: Can Oil & Energy ETFs Continue to Soar?).
Earnings in Focus
The largest U.S. oil producer, Exxon Mobil, posted earnings per share of $2.06, missing the Zacks Consensus Estimate of $2.19 and lower than the year-ago earnings of $2.83. Revenues fell 4% year over year to $83.08 billion and also lagged the consensus mark of $86.6 billion.
Earnings per share at Chevron came in at $2.93, which beat the Zacks Consensus Estimate of $2.84 but declined from the year-ago earnings of $3.55 per share. Revenues declined 4.1% year over year to $48.7 billion and lagged the consensus mark of $49.9 billion.
Key Growth Drivers
Both Exxon and Chevron are now aggressively expanding their operations to secure dominant positions in Guyana and the Permian Basin, outstripping their major European competitors. Both predict a 10% increase in their oil production in the Permian Basin this year.
Exxon revealed that its oil production in Guyana surged by 70% year over year in the first quarter. This increase could account for nearly a fifth of this year's global demand growth, as projected by the International Energy Agency. Exxon is poised to become the largest producer in the Permian with its impending $64 billion acquisition of Pioneer Natural Resources, which is expected to close in the second quarter. Meanwhile, Chevron plans to acquire a 30% stake in Guyana’s highly productive Stabroek Block by investing $52 billion in Hess Corp.
Both the oil majors currently have a Zacks Rank #3 (Hold) with a Value Score of B.
Energy Select Sector SPDR is the largest and the most popular ETF in the energy space, with AUM of $41 billion and an average daily volume of 15 million shares per day. It offers exposure to the broad energy space and follows the Energy Select Sector Index. Energy Select Sector SPDR holds 23 securities in its basket, with Exxon Mobil and Chevron occupying the top two spots with 22.8% and an 17.1% share, respectively (see: all the Energy ETFs here).
Energy Select Sector SPDR charges 9 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
Vanguard Energy ETF provides exposure to a basket of 114 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. Here again, Exxon and Chevron are the two leading firms with a 22% and 13.5% allocation, respectively.
Vanguard Energy ETF has amassed $9 billion in its asset base. It sees a good volume of about 489,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook.
iShares U.S. Energy ETF tracks the Russell 1000 Energy RIC 22.5/45 Capped Gross Index (USD), giving investors exposure to U.S. companies that produce and distribute oil and gas. It holds 40 stocks in its basket, with Exxon Mobil and Chevron taking the top two positions at 22.5% and 15% share, respectively.
iShares U.S. Energy ETF charges 40 bps in fees per year from its investors. It has AUM of $1.4 billion and an average daily volume of about 476,000 shares. The product has a Zacks ETF Rank #3 with a High risk outlook.
Fidelity MSCI Energy Index ETF fund follows the MSCI USA IMI Energy Index, holding 121 stocks in its basket. Of these, XOM and CVX take the top two spots at 22% and 14.5%, respectively (read: Energy ETF Hits New 52-Week High).
Fidelity MSCI Energy Index ETF charges 8 bps in annual fees and trades in a good volume of around 730,000 shares. It has accumulated $2 billion in its asset base and has a Zacks ETF Rank #3 with a High risk outlook.
Strive U.S. Energy ETF seeks broad market exposure to the U.S. energy sector and follows the Bloomberg US Energy Select Index. It holds 42 stocks in its basket, with Exxon Mobil and Chevron taking the top two positions at 22.5% and 19.6% share, respectively.
Strive U.S. Energy ETF has gathered $359.9 million in its asset base. It charges 41 bps in fees per year from investors and trades in an average daily volume of 36,000 shares. DRLL has a Zacks ETF Rank #2 (Buy).
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Energy ETFs in Focus Post Exxon, Chevron's Weak Q1 Earnings
Two energy behemoths — Exxon Mobil Corp. (XOM - Free Report) and Chevron Corp. (CVX - Free Report) — reported disappointing first-quarter 2024 results. Both companies lagged estimates on revenues, while Chevron managed to beat earnings estimates. Lower gas prices and narrowing refining margins took a toll on their profits.
XOM shares fell 2.8% at the close on the day following the earnings announcement, while CVX gained a modest 0.4%. This has put the focus on energy ETFs like Energy Select Sector SPDR (XLE - Free Report) , Vanguard Energy ETF (VDE - Free Report) , iShares U.S. Energy ETF (IYE - Free Report) , Fidelity MSCI Energy Index ETF (FENY - Free Report) and Strive U.S. Energy ETF (DRLL - Free Report) , with the largest allocation to the energy behemoths (read: Can Oil & Energy ETFs Continue to Soar?).
Earnings in Focus
The largest U.S. oil producer, Exxon Mobil, posted earnings per share of $2.06, missing the Zacks Consensus Estimate of $2.19 and lower than the year-ago earnings of $2.83. Revenues fell 4% year over year to $83.08 billion and also lagged the consensus mark of $86.6 billion.
Earnings per share at Chevron came in at $2.93, which beat the Zacks Consensus Estimate of $2.84 but declined from the year-ago earnings of $3.55 per share. Revenues declined 4.1% year over year to $48.7 billion and lagged the consensus mark of $49.9 billion.
Key Growth Drivers
Both Exxon and Chevron are now aggressively expanding their operations to secure dominant positions in Guyana and the Permian Basin, outstripping their major European competitors. Both predict a 10% increase in their oil production in the Permian Basin this year.
Exxon revealed that its oil production in Guyana surged by 70% year over year in the first quarter. This increase could account for nearly a fifth of this year's global demand growth, as projected by the International Energy Agency. Exxon is poised to become the largest producer in the Permian with its impending $64 billion acquisition of Pioneer Natural Resources, which is expected to close in the second quarter. Meanwhile, Chevron plans to acquire a 30% stake in Guyana’s highly productive Stabroek Block by investing $52 billion in Hess Corp.
Both the oil majors currently have a Zacks Rank #3 (Hold) with a Value Score of B.
ETFs in Focus
Energy Select Sector SPDR (XLE - Free Report)
Energy Select Sector SPDR is the largest and the most popular ETF in the energy space, with AUM of $41 billion and an average daily volume of 15 million shares per day. It offers exposure to the broad energy space and follows the Energy Select Sector Index. Energy Select Sector SPDR holds 23 securities in its basket, with Exxon Mobil and Chevron occupying the top two spots with 22.8% and an 17.1% share, respectively (see: all the Energy ETFs here).
Energy Select Sector SPDR charges 9 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
Vanguard Energy ETF (VDE - Free Report)
Vanguard Energy ETF provides exposure to a basket of 114 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. Here again, Exxon and Chevron are the two leading firms with a 22% and 13.5% allocation, respectively.
Vanguard Energy ETF has amassed $9 billion in its asset base. It sees a good volume of about 489,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook.
iShares U.S. Energy ETF (IYE - Free Report)
iShares U.S. Energy ETF tracks the Russell 1000 Energy RIC 22.5/45 Capped Gross Index (USD), giving investors exposure to U.S. companies that produce and distribute oil and gas. It holds 40 stocks in its basket, with Exxon Mobil and Chevron taking the top two positions at 22.5% and 15% share, respectively.
iShares U.S. Energy ETF charges 40 bps in fees per year from its investors. It has AUM of $1.4 billion and an average daily volume of about 476,000 shares. The product has a Zacks ETF Rank #3 with a High risk outlook.
Fidelity MSCI Energy Index ETF (FENY - Free Report)
Fidelity MSCI Energy Index ETF fund follows the MSCI USA IMI Energy Index, holding 121 stocks in its basket. Of these, XOM and CVX take the top two spots at 22% and 14.5%, respectively (read: Energy ETF Hits New 52-Week High).
Fidelity MSCI Energy Index ETF charges 8 bps in annual fees and trades in a good volume of around 730,000 shares. It has accumulated $2 billion in its asset base and has a Zacks ETF Rank #3 with a High risk outlook.
Strive U.S. Energy ETF (DRLL - Free Report)
Strive U.S. Energy ETF seeks broad market exposure to the U.S. energy sector and follows the Bloomberg US Energy Select Index. It holds 42 stocks in its basket, with Exxon Mobil and Chevron taking the top two positions at 22.5% and 19.6% share, respectively.
Strive U.S. Energy ETF has gathered $359.9 million in its asset base. It charges 41 bps in fees per year from investors and trades in an average daily volume of 36,000 shares. DRLL has a Zacks ETF Rank #2 (Buy).