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Walmart Q3 Results Put These ETFs in Focus

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Walmart (WMT - Free Report) delighted investors with robust third-quarter 2020 results driven by an e-commerce boom amid the pandemic. The mega retailer beat the estimates on both revenues and earnings.

Earnings per share came in at $1.34, outpacing the Zacks Consensus Estimate by 15 cents. Also, the bottom line improved 15.5% from the year-ago earnings. Revenues increased 5.2% year over year to $134.7 billion and edged past the consensus mark of $133 billion.

U.S. comparable sales soared 6.4% on strength across key categories, including general merchandise, health & wellness and food. E-commerce sales surged 79% as consumers increasingly turned online to shop for everything from electronics and toys to groceries amid the pandemic. Walmart’s grocery pickup and delivery posted record-high sales volumes. “The grocery category posted mid-single-digit sales growth with “broad-based strength across most categories” and consumables sales growth “led by strength in household chemicals and paper products.”

The mega retailer is expected to benefit from an early start to the holiday shopping season this year. Unlike last year, sales and promotions related to Black Friday will not be restricted to a single day but spread across multiple stores and online events for several days in order to avoid huge gatherings (read: ETF Areas to Gain From the Holiday Shopping Season).

Despite the solid results, shares of Walmart dropped 2% on the day. The stock currently has a Zacks Rank #3 (Hold) and a VGM Score of A.

ETFs in Focus

ETFs having the highest allocation to the world's largest brick-and-mortar retailer have been in focus following the results. Below we have highlighted six of them:

Consumer Staples Select Sector SPDR Fund (XLP - Free Report)

This is the most-popular consumer staples ETF with AUM of $13.6 billion and follows the Consumer Staples Select Sector Index. The fund charges 13 bps in fees per year from investors and trades in heavy volume of nearly 8.9 million shares a day. In total, the fund holds about 32 securities in its basket with Walmart taking the second spot at 10.2%. From a sector perspective, household products takes the largest share at 26.4% while beverages, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all Consumer Staples ETFs here).

Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)

This fund tracks the MSCI USA IMI Consumer Staples Index, holding 96 stocks in its basket. Out of these, Walmart takes the second spot with 9.5% share. The ETF is widely diversified across household products, beverages, food and staples retailing, and food products. It has amassed $879.9 million in its asset base, while trading in moderate volume of around 137,000 shares a day, on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

VanEck Vectors Retail ETF (RTH - Free Report)

This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, WMT occupies the third position in the basket with 9.3% share. The product has amassed $188.6 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 13,000 shares per day. RTH has a Zacks ETF Rank #3 with a Medium risk outlook (read: Spooked by COVID-19? Track 3 ETFs & Stocks for Halloween Treats).

Vanguard Consumer Staples ETF (VDC - Free Report)

This fund manages a $5.7 billion asset base and has exposure to a basket of 94 consumer stocks by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It charges a fee of 10 bps per year and trades in a good volume of around 124,000 shares per day on average. Here, Walmart occupies the fourth position in the basket with 8.7% allocation. The product is widely spread across household products, soft drinks, packaged foods & meat, and hypermarkets & supercenters that make up for a double-digit allocation each. The fund has a Zacks ETF Rank #3 with a Medium risk outlook.

First Trust Nasdaq Retail ETF (FTXD - Free Report)

The fund follows the Nasdaq US Smart Retail Index and holds 51 stocks in its basket. WMT takes the third spot with 7.2% of the assets. FTXD has accumulated $6.8 million in its asset base and has an expense ratio of 0.60%. It trades in an average daily volume of 1,000 shares and has a Zacks ETF Rank #3.

iShares Evolved U.S. Discretionary Spending ETF (IEDI - Free Report)

This is an actively managed ETF that employs data science techniques to identify companies with exposure to the discretionary spending sector. Holding 219 stocks in its basket, WMT occupies the third position with 6.3% share. The fund has accumulated $21.1 million in its asset base and charges 18 bps in fees per year. Volume is paltry as it exchanges 4,000 shares a day, on average.

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