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Energy ETFs in Focus Post Exxon, Chevron Q4 Earnings

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The energy sector was the best performer last year but the strong momentum fizzled to start 2023. Crude prices have fallen sharply over the past month on concerns over the global slowdown. The trend might reverse as two big oil giants — Exxon Mobil (XOM - Free Report) and Chevron (CVX - Free Report) — posted mixed Q4 earnings results (read: Energy ETF Winners in Oil's Best Week Since October).

Exxon Mobil beat earnings estimates and lagged on revenues while Chevron missed on earnings and topped revenue estimates. However, both major U.S. oil super powers capped off blockbuster results in 2022 with record annual profit. This has put focus on energy ETFs like Energy Select Sector SPDR (XLE - Free Report) , iShares U.S. Energy ETF (IYE - Free Report) , Vanguard Energy ETF (VDE - Free Report) and Fidelity MSCI Energy Index ETF (FENY - Free Report) with the largest allocation to the energy behemoths.

Earnings in Focus

The largest U.S. oil producer Exxon Mobil reported earnings per share of $3.40 in the fourth quarter, surpassing the Zacks Consensus Estimate of $3.32 and improving from year-ago earnings of $2.05. Revenues rose 12.3% year over year to $95.4 billion but fell shy of the estimated figure of $101 billion. Exxon Mobil capped off blockbuster results in 2022 with record annual profit.

Earnings per share at Chevron came in at $4.09, missing the Zacks Consensus Estimate by 7 cents but improving from year-ago earnings of $2.56 per share. Revenues increased 17.3% year over year to $56.47 billion and edged past the consensus mark of $52.27 billion. Chevron boosted its dividend by more than 6% and authorized a new $75 billion share buyback program that will take effect at the start of Q2 (read: Chevron ETFs to Buy on Buyback & 6% Dividend Hike).

ETFs in Focus

Energy Select Sector SPDR (XLE - Free Report)

Energy Select Sector SPDR is the largest and the most popular ETF in the energy space, with AUM of $43.1 billion and an average daily volume of 20 million shares per day. It offers exposure to the broad energy space and follows the Energy Select Sector Index. Energy Select Sector SPDR holds 23 securities in its basket, with Exxon Mobil and Chevron occupying the top two spots with 23.1% and 19.1% share, respectively.

Energy Select Sector SPDR charges 10 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

Vanguard Energy ETF (VDE - Free Report)

Vanguard Energy ETF provides exposure to a basket of 111 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. Here again, Exxon and Chevron are the two leading firms with a 22.5% and 16.1% allocation, respectively.

Vanguard Energy ETF has amassed $8.7 billion in its asset base and sees a good volume of about 551,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 with a High risk outlook.

iShares U.S. Energy ETF (IYE - Free Report)

iShares U.S. Energy 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 42 stocks in its basket, with Exxon Mobil and Chevron taking the top two positions in the basket at 22.2% and 16.1% share, respectively (see: all the Energy ETFs here).

iShares U.S. Energy ETF charges 39 bps in fees per year from its investors. It has AUM of $2 billion and an average daily volume of about 719,000 shares. The product has a Zacks ETF Rank #2 with a High risk outlook.

Fidelity MSCI Energy Index ETF (FENY - Free Report)

Fidelity MSCI Energy Index ETF fund follows the MSCI USA IMI Energy Index, holding 123 stocks in its basket. Of these, XOM and CVX take the top two spots at 22.3% and 16%, respectively.

Fidelity MSCI Energy Index ETF charges 8 bps in annual fees and trades in a good volume of around 830,000 shares. It has accumulated $1.7 billion in its asset base and has a Zacks ETF Rank #2 with a High risk outlook.

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