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Like the last reporting cycle, the energy sector has retained its momentum this earnings season as well. This is especially true as the sector is one of the largest contributors to the S&P 500 earnings growth with revenue growth of 33.3%, the highest among the 16 Zacks sectors, as per the latest Earnings Preview.
Additionally, earnings and revenue surprises of 70% and 63.3%, respectively, were impressive. However, solid results were unable to push up the price of energy stocks as these are down by an average of 1.8% versus 0.1% loss for the S&P 500 in response to earnings announcements.
In particular, on April 28, the two U.S. supermajor oil producers – Exxon Mobil (XOM - Free Report) and Chevron (CVX - Free Report) – came up with an earnings beat though XOM lagged revenue estimates.
Earnings in Focus
The largest U.S. oil company, Exxon Mobil, reported earnings per share of 95 cents, trumping the Zacks Consensus Estimate by 10 cents and improving from the year-ago earnings of 43 cents. Revenues climbed 30% year over year to $63.29 billion but were below our $64.35 billion estimate. The stock is up 2% since the earnings announcement (read: ETFs in Focus on Exxon's Big Investment Plans).
Chevron, which trails Exxon Mobil, topped on both fronts. Earnings per share came in at $1.41, strongly outpacing the Zacks Consensus Estimate of 85 cents and turned around from the year-ago loss of 39 cents. Revenues rose 42% year over year to $33.42 billion and edged past our estimate of $32.1 billion. Shares of CVX are up 1.1% since its earnings release.
Investors should note that both stocks have a Zacks Rank #3 (Hold) with a VGM Style Score of A and has a poor Zacks Industry rank in the bottom 20%.
ETFs in Focus
Despite the rise in stock prices post earnings, ETFs having the largest allocation to these energy behemoths failed to get a boost. These funds lost nearly 0.6% over the past 10 days and have a Zacks ETF Rank #3 (see: all the energy ETFs here).
This ETF tracks the Dow Jones U.S. Oil & Gas Index, giving investors exposure to the broad energy space. It holds 70 stocks in its basket with AUM of $1.1 billion and average daily volume of more than 945,000 shares. The product charges 43 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 24% and 14.1%, respectively. From a sector perspective, integrated oil & gas makes up for 41.4% share while oil exploration & production, and oil equipment & services round off the next two spots with a double-digit exposure each.
This is the largest and most popular ETF in the energy space with AUM of $16 billion and average daily volume of around 14.7 million shares per day. Expense ratio comes in at 0.14%. The fund follows the Energy Select Sector Index and holds 36 securities in its basket. XOM and CVX occupy the top two spots with 23.9% and 15.7% share, respectively. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 83.6% of the portfolio while energy equipment & services takes the remainder (read: Trump's First 100 Days: 5 Must See ETF Charts).
The fund follows the MSCI USA IMI Energy Index, holding 118 stocks in its basket. Out of these, XOM and CVX take the top two spots at 23.4% and 13.7%, respectively. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 82.3% 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 253,000 shares. It has accumulated $446.9 million in its asset base.
This fund manages about $4 billion in asset base and provides exposure to a basket of 130 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. The product sees good volume of about 297,000 shares and charges 10 bps in annual fees. Here again, Exxon and Chevron are the top firms with 22.4% and 13.4% allocation, respectively. Though the product is skewed toward the integrated oil & gas sector with 39% of assets, oil exploration and production, and oil equipment services also provide a nice mix in the portfolio with a double-digit exposure each.
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Energy ETFs Fall Despite Strong Q1 Earnings
Like the last reporting cycle, the energy sector has retained its momentum this earnings season as well. This is especially true as the sector is one of the largest contributors to the S&P 500 earnings growth with revenue growth of 33.3%, the highest among the 16 Zacks sectors, as per the latest Earnings Preview.
Additionally, earnings and revenue surprises of 70% and 63.3%, respectively, were impressive. However, solid results were unable to push up the price of energy stocks as these are down by an average of 1.8% versus 0.1% loss for the S&P 500 in response to earnings announcements.
In particular, on April 28, the two U.S. supermajor oil producers – Exxon Mobil (XOM - Free Report) and Chevron (CVX - Free Report) – came up with an earnings beat though XOM lagged revenue estimates.
Earnings in Focus
The largest U.S. oil company, Exxon Mobil, reported earnings per share of 95 cents, trumping the Zacks Consensus Estimate by 10 cents and improving from the year-ago earnings of 43 cents. Revenues climbed 30% year over year to $63.29 billion but were below our $64.35 billion estimate. The stock is up 2% since the earnings announcement (read: ETFs in Focus on Exxon's Big Investment Plans).
Chevron, which trails Exxon Mobil, topped on both fronts. Earnings per share came in at $1.41, strongly outpacing the Zacks Consensus Estimate of 85 cents and turned around from the year-ago loss of 39 cents. Revenues rose 42% year over year to $33.42 billion and edged past our estimate of $32.1 billion. Shares of CVX are up 1.1% since its earnings release.
Investors should note that both stocks have a Zacks Rank #3 (Hold) with a VGM Style Score of A and has a poor Zacks Industry rank in the bottom 20%.
ETFs in Focus
Despite the rise in stock prices post earnings, ETFs having the largest allocation to these energy behemoths failed to get a boost. These funds lost nearly 0.6% over the past 10 days and have a Zacks ETF Rank #3 (see: all the energy ETFs here).
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 70 stocks in its basket with AUM of $1.1 billion and average daily volume of more than 945,000 shares. The product charges 43 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 24% and 14.1%, respectively. From a sector perspective, integrated oil & gas makes up for 41.4% share while oil exploration & production, and oil equipment & services round off the next two spots with a double-digit exposure each.
Energy Select Sector SPDR (XLE - Free Report)
This is the largest and most popular ETF in the energy space with AUM of $16 billion and average daily volume of around 14.7 million shares per day. Expense ratio comes in at 0.14%. The fund follows the Energy Select Sector Index and holds 36 securities in its basket. XOM and CVX occupy the top two spots with 23.9% and 15.7% share, respectively. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 83.6% of the portfolio while energy equipment & services takes the remainder (read: Trump's First 100 Days: 5 Must See ETF Charts).
Fidelity MSCI Energy Index ETF (FENY - Free Report)
The fund follows the MSCI USA IMI Energy Index, holding 118 stocks in its basket. Out of these, XOM and CVX take the top two spots at 23.4% and 13.7%, respectively. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 82.3% 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 253,000 shares. It has accumulated $446.9 million in its asset base.
Vanguard Energy ETF (VDE - Free Report)
This fund manages about $4 billion in asset base and provides exposure to a basket of 130 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. The product sees good volume of about 297,000 shares and charges 10 bps in annual fees. Here again, Exxon and Chevron are the top firms with 22.4% and 13.4% allocation, respectively. Though the product is skewed toward the integrated oil & gas sector with 39% of assets, oil exploration and production, and oil equipment services also provide a nice mix in the portfolio with a double-digit exposure each.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>