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Energy appears to be the weakest sector this reporting cycle. Total second-quarter earnings for the sector are expected to be down 155.4% from the same period last year on 26.2% lower revenues.
Earnings from the two U.S. supermajor oil producers, namely Exxon Mobil (XOM - Free Report) and Chevron (CVX - Free Report) disappointed investors. The duo delivered the worst set of quarterly results of the modern era, weighed down by the slump in oil prices and the global collapse in demand due to COVID-19 (see: all the Energy ETFs here).
Earnings in Focus
The largest U.S. oil producer Exxon Mobil reported loss per share of 70 cents, much wider than the Zacks Consensus Estimate of loss of 63 cents. This represents the first back-to-back quarterly loss in at least 36 years. In the year-ago quarter, the company reported earnings of 73 cents per share. Revenues tumbled 52% year over year to $32.6 billion and fell shy of the estimated figure of $36.1 billion.
Chevron also reported wider-than-expected quarterly loss per share of $1.59. The Zacks Consensus Estimate was of 93 cents loss per share. The company earned $1.77 per share in the year-ago quarter. Revenues plunged 65.3% year over year to $13.5 billion and fell short of the consensus mark of $20.5 billion (read: Energy ETFs to Surge on Chevron-Noble Energy Deal).
ETFs in Focus
Given the weak earnings, energy ETFs with the largest allocation to energy behemoths are seeing rough trading. Below we highlighted a few in details.
This is the largest and the most-popular ETF in the energy space with AUM of $10 billion and average daily volume of 26.4 million shares per day. Expense ratio is 0.13%. The fund follows the Energy Select Sector Index and holds 26 securities in its basket. Chevron and Exxon Mobil occupy the top two spots with 23% and 22.5% share, respectively. The product has a Zacks ETF Rank #3 (Hold) (read: Will Coronavirus Vaccine Optimism Drive These ETFs?).
This ETF tracks the Dow Jones U.S. Oil & Gas Index, giving investors exposure to U.S. companies that produce and distribute oil and gas. It holds 49 stocks in its basket with AUM of $431.3 million and average daily volume of about 2.7 million shares. The product charges 42 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 23.8% and 21.1%, respectively. The product has a Zacks ETF Rank #5 (Strong Sell).
This fund manages $2.8 billion in asset base and provides exposure to a basket of 123 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. The product sees a good volume of about 879,000 shares and charges 10 bps in annual fees. Here again, Exxon and Chevron are the two leading firms with 22.4% and 20.9% allocation each. VDE has a Zacks ETF Rank #5.
The fund follows the MSCI USA IMI Energy Index, holding 83 stocks in its basket. Of these, XOM and CVX take the top two spots at 23% and 20.5%, respectively. The product charges 8 bps in annual fees and trades in a good volume of around 1 million shares. It has accumulated $451.7 million in its asset base.
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Energy ETFs Down on Weak Exxon, Chevron Earnings
Energy appears to be the weakest sector this reporting cycle. Total second-quarter earnings for the sector are expected to be down 155.4% from the same period last year on 26.2% lower revenues.
Earnings from the two U.S. supermajor oil producers, namely Exxon Mobil (XOM - Free Report) and Chevron (CVX - Free Report) disappointed investors. The duo delivered the worst set of quarterly results of the modern era, weighed down by the slump in oil prices and the global collapse in demand due to COVID-19 (see: all the Energy ETFs here).
Earnings in Focus
The largest U.S. oil producer Exxon Mobil reported loss per share of 70 cents, much wider than the Zacks Consensus Estimate of loss of 63 cents. This represents the first back-to-back quarterly loss in at least 36 years. In the year-ago quarter, the company reported earnings of 73 cents per share. Revenues tumbled 52% year over year to $32.6 billion and fell shy of the estimated figure of $36.1 billion.
Chevron also reported wider-than-expected quarterly loss per share of $1.59. The Zacks Consensus Estimate was of 93 cents loss per share. The company earned $1.77 per share in the year-ago quarter. Revenues plunged 65.3% year over year to $13.5 billion and fell short of the consensus mark of $20.5 billion (read: Energy ETFs to Surge on Chevron-Noble Energy Deal).
ETFs in Focus
Given the weak earnings, energy ETFs with the largest allocation to energy behemoths are seeing rough trading. Below we highlighted a few in details.
Energy Select Sector SPDR (XLE - Free Report)
This is the largest and the most-popular ETF in the energy space with AUM of $10 billion and average daily volume of 26.4 million shares per day. Expense ratio is 0.13%. The fund follows the Energy Select Sector Index and holds 26 securities in its basket. Chevron and Exxon Mobil occupy the top two spots with 23% and 22.5% share, respectively. The product has a Zacks ETF Rank #3 (Hold) (read: Will Coronavirus Vaccine Optimism Drive These ETFs?).
iShares U.S. Energy ETF (IYE - Free Report)
This ETF tracks the Dow Jones U.S. Oil & Gas Index, giving investors exposure to U.S. companies that produce and distribute oil and gas. It holds 49 stocks in its basket with AUM of $431.3 million and average daily volume of about 2.7 million shares. The product charges 42 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 23.8% and 21.1%, respectively. The product has a Zacks ETF Rank #5 (Strong Sell).
Vanguard Energy ETF (VDE - Free Report)
This fund manages $2.8 billion in asset base and provides exposure to a basket of 123 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. The product sees a good volume of about 879,000 shares and charges 10 bps in annual fees. Here again, Exxon and Chevron are the two leading firms with 22.4% and 20.9% allocation each. VDE has a Zacks ETF Rank #5.
Fidelity MSCI Energy Index ETF (FENY - Free Report)
The fund follows the MSCI USA IMI Energy Index, holding 83 stocks in its basket. Of these, XOM and CVX take the top two spots at 23% and 20.5%, respectively. The product charges 8 bps in annual fees and trades in a good volume of around 1 million shares. It has accumulated $451.7 million in its asset base.
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 >>