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Energy ETFs to Rally on Upbeat Exxon, Chevron Q2 Earnings
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The energy sector has been the top performer this year, buoyed by higher oil prices. U.S. oil and Brent futures climbed to their highest since October 2014 amid the global supply crunch and strong demand in the United States, the world's biggest consumer. Better-than-expected earnings from the two big oil giants — Exxon Mobil (XOM - Free Report) and Chevron (CVX - Free Report) — are expected to continue fueling the strong trend.
This is especially true as Exxon Mobil posted its biggest quarterly profit in seven years while Chevron logged its biggest earnings since first-quarter 2013. The strong performance was the result of soaring natural gas prices and energy shortage that pushed oil to a multi-year high (see: all the Energy ETFs here).
Earnings in Focus
Exxon Mobil came up with earnings of $1.58 per share, beating the Zacks Consensus Estimate by a penny. The company had incurred a loss of 18 cents in the year-ago quarter. Revenues jumped 60% to $73.79 billion and edged past the estimate of $73.3 billion. This marks its strongest results since 2017. The largest U.S. oil producer also pledged to revive its share repurchase program of around $10 billion over the next two years, bolstered by a jump in profit and improved cash flow in the third quarter.
Chevron reported earnings of $2.96 per share, outpacing the Zacks Consensus Estimate of $2.21 and improving from 18 cents per share in the year-ago period. Revenues jumped 82.3% year over year to $44.7 billion and edged past the consensus mark of $42.5 billion (read: Energy Sector Looks to Post Solid Q3 Earnings: ETFs to Tap).
ETFs in Focus
Following the results, energy ETFs with the largest allocation to the energy behemoths are in focus. Below we highlight the most popular ones in detail.
This is the largest and the most-popular ETF in the energy space, with AUM of $27.1 billion and an average daily volume of 30.9 million shares per day. The expense ratio is 0.12%. The fund follows the Energy Select Sector Index and holds 21 securities in its basket. Exxon Mobil and Chevron occupy the top two spots with 22.3% and 19.9% share, respectively. The product has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Energy ETF Hits New 52-Week High).
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 36 stocks in its basket with AUM of $2.4 billion and an average daily volume of about 2.4 million shares. The product charges 41 bps in fees per year from its investors. Exxon Mobil and Chevron occupy the top two positions in the basket, taking the bigger chunk of assets at 20.3% and 16.5%, respectively. The product has a Zacks ETF Rank #3 with a High risk outlook.
This fund manages $5.9 billion in asset base and provides exposure to a basket of 95 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. The product sees a good volume of about 1.1 million shares and charges 10 bps in annual fees. Here again, Exxon and Chevron are the two leading firms with, respectively, 20.3% and 15.9% allocation. VDE has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: 5 ETFs & Stocks From the Favorite Sectors of Q3 Earnings).
The fund follows the MSCI USA IMI Energy Index, holding 99 stocks in its basket. Of these, XOM and CVX take the top two spots at 20.2% and 15.8%, respectively. The product charges 8 bps in annual fees and trades in a good volume of around 946,000 shares. It has accumulated $1.1 billion in its asset base and has a Zacks ETF Rank #3 with a High risk outlook.
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Energy ETFs to Rally on Upbeat Exxon, Chevron Q2 Earnings
The energy sector has been the top performer this year, buoyed by higher oil prices. U.S. oil and Brent futures climbed to their highest since October 2014 amid the global supply crunch and strong demand in the United States, the world's biggest consumer. Better-than-expected earnings from the two big oil giants — Exxon Mobil (XOM - Free Report) and Chevron (CVX - Free Report) — are expected to continue fueling the strong trend.
This is especially true as Exxon Mobil posted its biggest quarterly profit in seven years while Chevron logged its biggest earnings since first-quarter 2013. The strong performance was the result of soaring natural gas prices and energy shortage that pushed oil to a multi-year high (see: all the Energy ETFs here).
Earnings in Focus
Exxon Mobil came up with earnings of $1.58 per share, beating the Zacks Consensus Estimate by a penny. The company had incurred a loss of 18 cents in the year-ago quarter. Revenues jumped 60% to $73.79 billion and edged past the estimate of $73.3 billion. This marks its strongest results since 2017. The largest U.S. oil producer also pledged to revive its share repurchase program of around $10 billion over the next two years, bolstered by a jump in profit and improved cash flow in the third quarter.
Chevron reported earnings of $2.96 per share, outpacing the Zacks Consensus Estimate of $2.21 and improving from 18 cents per share in the year-ago period. Revenues jumped 82.3% year over year to $44.7 billion and edged past the consensus mark of $42.5 billion (read: Energy Sector Looks to Post Solid Q3 Earnings: ETFs to Tap).
ETFs in Focus
Following the results, energy ETFs with the largest allocation to the energy behemoths are in focus. Below we highlight the most popular ones in detail.
Energy Select Sector SPDR (XLE - Free Report)
This is the largest and the most-popular ETF in the energy space, with AUM of $27.1 billion and an average daily volume of 30.9 million shares per day. The expense ratio is 0.12%. The fund follows the Energy Select Sector Index and holds 21 securities in its basket. Exxon Mobil and Chevron occupy the top two spots with 22.3% and 19.9% share, respectively. The product has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Energy ETF Hits New 52-Week High).
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 36 stocks in its basket with AUM of $2.4 billion and an average daily volume of about 2.4 million shares. The product charges 41 bps in fees per year from its investors. Exxon Mobil and Chevron occupy the top two positions in the basket, taking the bigger chunk of assets at 20.3% and 16.5%, respectively. The product has a Zacks ETF Rank #3 with a High risk outlook.
Vanguard Energy ETF (VDE - Free Report)
This fund manages $5.9 billion in asset base and provides exposure to a basket of 95 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. The product sees a good volume of about 1.1 million shares and charges 10 bps in annual fees. Here again, Exxon and Chevron are the two leading firms with, respectively, 20.3% and 15.9% allocation. VDE has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: 5 ETFs & Stocks From the Favorite Sectors of Q3 Earnings).
Fidelity MSCI Energy Index ETF (FENY - Free Report)
The fund follows the MSCI USA IMI Energy Index, holding 99 stocks in its basket. Of these, XOM and CVX take the top two spots at 20.2% and 15.8%, respectively. The product charges 8 bps in annual fees and trades in a good volume of around 946,000 shares. It has accumulated $1.1 billion in its asset base and has a Zacks ETF Rank #3 with a High risk outlook.