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The first-quarter (Q1) earnings reporting cycle is nearing an end. Though investors' top focus remains on bottom line during an earnings reason, top line probably tells you more about the inherent strength of a company.
Why to Follow Revenue Growth This Reporting Cycle?
Per Earnings Trends issued on May 17, 2023, 92.4% of the S&P 500 companies have reported so far in Q1 with 4% decline in earnings and 4.4% growth in revenues. In Q1, 12 out of the Zacks classified 16 sectors of the S&P 500 witnessed an expansion in revenues so far while nine sectors reported earnings growth.
Further, investors should note that sales are harder to be influenced in an income statement than earnings. A company can land up on decent earnings numbers by adopting cost-cutting or some other measures that do not speak for its core strength. But it is harder for a company to mold its revenue figure.
Below, we highlight five sectors and their related ETFs that could be used to book some profits on revenue growth.
The sector is expected to witness revenue growth of 18.2% in Q1 on 10.4% earnings growth. Decent sales of Motor Vehicle & Parts and the price inflation of new cars have been palpable. Both factors indicate that the business conditions remained favorable for the auto industry.
The sector is expected to record 9.7% revenue growth in Q1 on 15.7% expansion in earnings. Rising geopolitical tensions, rising M&A activities and cheaper valuation should support the sector.
Industrial activities have been in decent shape. Growing employment in manufacturing sector calls for that strength. The sector is expected to witness revenue growth of 8.3% in Q1 on 13.7% increase in earnings.
The sector is expected to witness revenue growth of 11.8% in Q1 revenues on a decline of 0.8% in earnings. Being a low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus, considered a defensive investment or a safe haven amid economic or political turmoil.
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5 Sector ETFs to Bet On Revenue Growth in Q1
The first-quarter (Q1) earnings reporting cycle is nearing an end. Though investors' top focus remains on bottom line during an earnings reason, top line probably tells you more about the inherent strength of a company.
Why to Follow Revenue Growth This Reporting Cycle?
Per Earnings Trends issued on May 17, 2023, 92.4% of the S&P 500 companies have reported so far in Q1 with 4% decline in earnings and 4.4% growth in revenues. In Q1, 12 out of the Zacks classified 16 sectors of the S&P 500 witnessed an expansion in revenues so far while nine sectors reported earnings growth.
Further, investors should note that sales are harder to be influenced in an income statement than earnings. A company can land up on decent earnings numbers by adopting cost-cutting or some other measures that do not speak for its core strength. But it is harder for a company to mold its revenue figure.
Below, we highlight five sectors and their related ETFs that could be used to book some profits on revenue growth.
Sector ETFs in Focus
Consumer Discretionary – Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
The sector is expected to expand 16.9% in Q1 on 30.4% growth in earnings.
Autos – First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report)
The sector is expected to witness revenue growth of 18.2% in Q1 on 10.4% earnings growth. Decent sales of Motor Vehicle & Parts and the price inflation of new cars have been palpable. Both factors indicate that the business conditions remained favorable for the auto industry.
Aerospace – iShares U.S. Aerospace & Defense ETF (ITA - Free Report)
The sector is expected to record 9.7% revenue growth in Q1 on 15.7% expansion in earnings. Rising geopolitical tensions, rising M&A activities and cheaper valuation should support the sector.
Industrials – Industrial Select Sector SPDR ETF (XLI - Free Report)
Industrial activities have been in decent shape. Growing employment in manufacturing sector calls for that strength. The sector is expected to witness revenue growth of 8.3% in Q1 on 13.7% increase in earnings.
Utilities – Utilities Select Sector SPDR ETF (XLU - Free Report)
The sector is expected to witness revenue growth of 11.8% in Q1 revenues on a decline of 0.8% in earnings. Being a low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus, considered a defensive investment or a safe haven amid economic or political turmoil.