Back to top

Image: Bigstock

Mixed Q1 Earnings Put Transport ETFs in Focus

Read MoreHide Full Article

The first-quarter earnings picture for the transportation sector has been dismal so far. This is especially true as total earnings for the sector that have been reported so far are down 181.3% on 7.8% lower revenues. This is reflective of continued operating woes in the airline space, which has been hit hard by the resurgence in COVID-19 infections.

For a better understanding, let’s delve into the results of some well-known industry players:

Transportation Earnings in Brief

The world's largest package delivery company United Parcel Service (UPS - Free Report) topped the estimates on both revenues and earnings. Earnings of $2.77 per share were $1.10 ahead of the consensus mark and the top line of $22.9 billion came in above the estimated $20.4 billion.

Major railroads Union Pacific (UNP - Free Report) and Kansas City (KSU - Free Report) missed estimates. Union Pacific lagged the earnings estimate by 6 cents and the revenue estimate by $35 million. Kansas City fell short of the earnings estimate by 9 cents and revenue estimate by $1 million. On the other hand, Norfolk Southern Corp (NSC - Free Report) topped the earnings estimate by 11 cents and the revenue estimate by $25 million.

U.S. airlines Delta Air Lines (DAL - Free Report) and United Continental (UAL - Free Report) delivered worse-than-expected results. Delta incurred a loss of $3.55 per share, wider than the Zacks Consensus Estimate of a loss of $3.08. Revenues of $4.15 billion topped the consensus mark of $3.82 billion. United posted a loss of $7.50 per share, wider than the Zacks Consensus Estimate of a loss of $6.97 and revenues of $3.22 billion came in slightly below the estimated $3.25 billion (read: Airlines Earnings Mixed: What Lies ahead of ETF?).

Last but not the least, leading trucking carrier J.B. Hunt (JBHT - Free Report) beat estimates for earnings by 19 cents per share and revenues by $132 million.

ETFs in Focus

The Q1 earnings reports have led to volatile trading in transport ETFs over the past month. As such, iShares Dow Jones Transportation Average Fund (IYT - Free Report) , SPDR S&P Transportation ETF (XTN - Free Report) and First Trust Nasdaq Transportation ETF (FTXR - Free Report) have gained 4.6%, 0.7% and 0.2%, respectively. However, all these products currently have a Zacks ETF Rank #2 (Buy), suggesting their outperformance in the months ahead (see: all the Industrials ETFs here).

IYT

The fund tracks the Dow Jones Transportation Average Index, giving investors exposure to a small basket of 20 securities. The in-focus seven firms make up for a combined 46.5% share. From a sector perspective, railroads, and air freight & logistics take the largest share at 28.3% and 25.8%, respectively, while trucking and airlines round off the next two spots with a double-digit exposure each. The fund has accumulated $2.1 billion in its asset base and sees a solid trading volume of around 198,000 shares a day. It charges 42 bps in annual fees.

XTN

This fund tracks the S&P Transportation Select Industry Index, holding 41 stocks in its basket. The in-focus firms account for less than 3.5% share each. Further, 32.9% of the portfolio is dominated by trucking while airlines, and air freight & logistics take around another one-fourth share each. With AUM of $651.3 million, the fund charges 35 bps in fees per year from investors and trades in a lower volume of around 149,000 shares a day (read: Winning Sector ETFs on Biden's First 100 Days of Ruling).

FTXR

This fund offers exposure to the 30 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. The in-focus seven firms represent a combined 25.7% share. Trucking takes the top spot at 19.2% while railroads and transportation services round off the next spots with a double-digit exposure each. FTXR has amassed $1.1 billion in its asset base and charges 60 bps in annual fees. The average trading volume is a modest 136,000 shares.

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 >>