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The first-quarter (Q1) earnings reporting cycle is nearing an end. Though investors' top focus remains on bottom line during an earnings reason, top line probably tells you more about the inherent strength of a company.
Per Earnings Trends issued on May 8, 2024, 88% of the S&P 500 companies have reported so far in Q1 with 5% growth in earnings and 4.2% growth in revenues. In Q1, 12 out of the Zacks classified 16 sectors of the S&P 500 witnessed an expansion in revenues so far while 11 sectors reported earnings growth.
Further, investors should note that sales are harder to be influenced in an income statement than earnings. A company can land up on decent earnings numbers by adopting cost-cutting or some other measures that do not speak for its core strength. But it is harder for a company to mold its revenue figure.
Below, we highlight five sectors and their related ETFs that could be used to book some profits on revenue growth.
The sector’s revenues have expanded 7.4% in Q1 on 55.2% growth in earnings. In any case, the sector is in decent shape. Job growth in the sector continued to trend up in April (+20,000). Over the prior 12 months, the industry had added an average of 7,000 jobs per month.
The sector’s revenues have grown 7.2% in Q1 on 11.6% growth in earnings. The tightening of the yield curve in the first quarter of this year probably have benefited banks’ net interest margins. Improvement in investment banking (IB) business and solid loan balance for some banks have boosted some banks’ revenues in the quarter.
The sector’s revenues have advanced 7% in Q1 on 7.4% growth in earnings. The Aerospace and Defense sector has been an area to watch lately, given the escalating geopolitical tensions and the depletion of weapon stocks. Additionally, rising merger and acquisition activities, and cheaper valuation are favorable for the sector.
Construction – Invesco Building & Construction ETF (PKB - Free Report)
The sector recorded 7% revenue growth in Q1 on 12.6% expansion in earnings. Activities remained strong in the space. In April, employment in construction (+9,000), following an increase of 40,000 in March. Over the prior 12 months, construction had added an average of 22,000 jobs per month.
The sector recorded 6.7% revenue growth in Q1 on 23.2% uptick in earnings. The ongoing emergence of AI, machine learning and IoT and the rising revenues from cloud probably have contributed to the sector’s revenue stream.
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5 Sector ETFs to Bet on Q1 Revenue Growth
The first-quarter (Q1) earnings reporting cycle is nearing an end. Though investors' top focus remains on bottom line during an earnings reason, top line probably tells you more about the inherent strength of a company.
Per Earnings Trends issued on May 8, 2024, 88% of the S&P 500 companies have reported so far in Q1 with 5% growth in earnings and 4.2% growth in revenues. In Q1, 12 out of the Zacks classified 16 sectors of the S&P 500 witnessed an expansion in revenues so far while 11 sectors reported earnings growth.
Further, investors should note that sales are harder to be influenced in an income statement than earnings. A company can land up on decent earnings numbers by adopting cost-cutting or some other measures that do not speak for its core strength. But it is harder for a company to mold its revenue figure.
Below, we highlight five sectors and their related ETFs that could be used to book some profits on revenue growth.
Sector ETFs in Focus
Retail – SPDR S&P Retail ETF (XRT - Free Report)
The sector’s revenues have expanded 7.4% in Q1 on 55.2% growth in earnings. In any case, the sector is in decent shape. Job growth in the sector continued to trend up in April (+20,000). Over the prior 12 months, the industry had added an average of 7,000 jobs per month.
Finance – Financial Select Sector SPDR ETF (XLF - Free Report)
The sector’s revenues have grown 7.2% in Q1 on 11.6% growth in earnings. The tightening of the yield curve in the first quarter of this year probably have benefited banks’ net interest margins. Improvement in investment banking (IB) business and solid loan balance for some banks have boosted some banks’ revenues in the quarter.
Aerospace – iShares U.S. Aerospace & Defense ETF (ITA - Free Report)
The sector’s revenues have advanced 7% in Q1 on 7.4% growth in earnings. The Aerospace and Defense sector has been an area to watch lately, given the escalating geopolitical tensions and the depletion of weapon stocks. Additionally, rising merger and acquisition activities, and cheaper valuation are favorable for the sector.
Construction – Invesco Building & Construction ETF (PKB - Free Report)
The sector recorded 7% revenue growth in Q1 on 12.6% expansion in earnings. Activities remained strong in the space. In April, employment in construction (+9,000), following an increase of 40,000 in March. Over the prior 12 months, construction had added an average of 22,000 jobs per month.
Technology – Technology Select Sector SPDR ETF (XLK - Free Report)
The sector recorded 6.7% revenue growth in Q1 on 23.2% uptick in earnings. The ongoing emergence of AI, machine learning and IoT and the rising revenues from cloud probably have contributed to the sector’s revenue stream.