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After the closing bell on Jun 20, transport bellwether FedEx (FDX - Free Report) delivered mixed fourth-quarter fiscal 2023 results. The courier company topped earnings estimates but missed on revenues. It provided weak guidance for the fiscal year on ongoing demand weakness and input cost inflation.
The disappointing guidance has pushed FDX shares down by 3% in after-market trade. The weak trading can also be felt in the ETF world, especially the ones with the highest allocation to FedEx. These include First Trust Nasdaq Transportation ETF (FTXR - Free Report) , ProShares Supply Chain Logistics ETF (SUPL - Free Report) , iShares U.S. Transportation ETF (IYT - Free Report) and Pacer Industrials and Logistics ETF (SHPP - Free Report) . Investors should keep a close eye on these funds.
Earnings per share came in at $4.94, beating the Zacks Consensus Estimate of $4.83 but declining from $6.87 a year ago. Revenues fell 7% year over year to $21.9 billion and were shy of the estimated $22.6 billion. This marks the third quarterly drop in revenues (see: all the Industrials ETFs here).
For fiscal 2024, FedEx forecasts flat to low-single-digit-percent revenue growth year over year and earnings per share in the range of $15.00 to $17.00 before certain adjustments, permanent cost reductions from the DRIVE transformation program of $1.8 billion, and capital spending of $5.7 billion.
The parcel company also expects to repurchase $2 billion of stock during fiscal 2024. It also anticipates progress on its turnaround efforts, targeting $1.8 billion in cost savings for 2024 as its ground operations and personnel in Canada are expected to transition to Federal Express Canada starting April 2024.
First Trust Nasdaq Transportation ETF offers exposure to the 38 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. FedEx occupies the second position in the basket with an 8.7% share. Automobiles, delivery services, railroads, trucking, airlines and commercial vehicle-equipment leasing make up for double-digit allocation each (read: 5 Top-Ranked ETFs That Crushed S&P 500 in First Half).
First Trust Nasdaq Transportation ETF has amassed $46.5 million in its asset base and charges 60 bps in annual fees. The average trading volume is light at 12,000 shares. FTXR has a Zacks ETF Rank #2.
ProShares Supply Chain Logistics ETF is the first ETF focused exclusively on the companies poised to benefit from the transformation of how raw materials and goods move around the world. These logistics companies include leading global shipping, railroad, air and trucking companies that collectively touch every point of the supply chain. It follows the FactSet Supply Chain Logistics Index, charging investors 58 bps in annual fees. ProShares Supply Chain Logistics ETF holds 40 stocks in its basket, with FedEx making up for the second spot with 4.7% of the assets.
ProShares Supply Chain Logistics ETF has AUM of $2 million and trades in a volume of 100 shares per day. It charges 58 bps in fees per year from investors.
iShares U.S. Transportation ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 46 securities. Of these, FedEx takes the fifth spot and makes up for 4.5% of the assets. Within the transportation sector, air freight and logistics, and railroad transportation take the top two spots with 29.3% and 25.7% share, respectively, while passenger airlines (15.9%) and cargo ground transportation (14.2%) round off the next two.
iShares U.S. Transportation ETF has accumulated $937.7 million in AUM while seeing a good trading volume of around 147,000 shares a day. The fund charges 39 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: A Look at Transport ETFs Post Q1 Earnings).
Pacer Industrials and Logistics ETF tracks the Pacer Global Supply Chain Infrastructure Index, which aims to offer investors exposure to globally-listed stocks and depositary receipts involved in the support and functioning of global distribution supply chains. It holds 94 stocks in its basket, with FedEx accounting for the eighth position at 4.2% share.
Pacer Industrials and Logistics ETF debuted in the space in June last year and has accumulated $1 million in its asset base. It trades in a meager volume of under 100 shares and charges 60 bps in annual fees.
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ETFs in Focus Post Mixed Q4 FedEx Earnings
After the closing bell on Jun 20, transport bellwether FedEx (FDX - Free Report) delivered mixed fourth-quarter fiscal 2023 results. The courier company topped earnings estimates but missed on revenues. It provided weak guidance for the fiscal year on ongoing demand weakness and input cost inflation.
The disappointing guidance has pushed FDX shares down by 3% in after-market trade. The weak trading can also be felt in the ETF world, especially the ones with the highest allocation to FedEx. These include First Trust Nasdaq Transportation ETF (FTXR - Free Report) , ProShares Supply Chain Logistics ETF (SUPL - Free Report) , iShares U.S. Transportation ETF (IYT - Free Report) and Pacer Industrials and Logistics ETF (SHPP - Free Report) . Investors should keep a close eye on these funds.
Earnings per share came in at $4.94, beating the Zacks Consensus Estimate of $4.83 but declining from $6.87 a year ago. Revenues fell 7% year over year to $21.9 billion and were shy of the estimated $22.6 billion. This marks the third quarterly drop in revenues (see: all the Industrials ETFs here).
For fiscal 2024, FedEx forecasts flat to low-single-digit-percent revenue growth year over year and earnings per share in the range of $15.00 to $17.00 before certain adjustments, permanent cost reductions from the DRIVE transformation program of $1.8 billion, and capital spending of $5.7 billion.
The parcel company also expects to repurchase $2 billion of stock during fiscal 2024. It also anticipates progress on its turnaround efforts, targeting $1.8 billion in cost savings for 2024 as its ground operations and personnel in Canada are expected to transition to Federal Express Canada starting April 2024.
ETFs in Focus
Let’s delve into each ETF below:
First Trust Nasdaq Transportation ETF (FTXR - Free Report)
First Trust Nasdaq Transportation ETF offers exposure to the 38 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. FedEx occupies the second position in the basket with an 8.7% share. Automobiles, delivery services, railroads, trucking, airlines and commercial vehicle-equipment leasing make up for double-digit allocation each (read: 5 Top-Ranked ETFs That Crushed S&P 500 in First Half).
First Trust Nasdaq Transportation ETF has amassed $46.5 million in its asset base and charges 60 bps in annual fees. The average trading volume is light at 12,000 shares. FTXR has a Zacks ETF Rank #2.
ProShares Supply Chain Logistics ETF (SUPL - Free Report)
ProShares Supply Chain Logistics ETF is the first ETF focused exclusively on the companies poised to benefit from the transformation of how raw materials and goods move around the world. These logistics companies include leading global shipping, railroad, air and trucking companies that collectively touch every point of the supply chain. It follows the FactSet Supply Chain Logistics Index, charging investors 58 bps in annual fees. ProShares Supply Chain Logistics ETF holds 40 stocks in its basket, with FedEx making up for the second spot with 4.7% of the assets.
ProShares Supply Chain Logistics ETF has AUM of $2 million and trades in a volume of 100 shares per day. It charges 58 bps in fees per year from investors.
iShares U.S. Transportation ETF (IYT - Free Report)
iShares U.S. Transportation ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 46 securities. Of these, FedEx takes the fifth spot and makes up for 4.5% of the assets. Within the transportation sector, air freight and logistics, and railroad transportation take the top two spots with 29.3% and 25.7% share, respectively, while passenger airlines (15.9%) and cargo ground transportation (14.2%) round off the next two.
iShares U.S. Transportation ETF has accumulated $937.7 million in AUM while seeing a good trading volume of around 147,000 shares a day. The fund charges 39 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: A Look at Transport ETFs Post Q1 Earnings).
Pacer Industrials and Logistics ETF (SHPP - Free Report)
Pacer Industrials and Logistics ETF tracks the Pacer Global Supply Chain Infrastructure Index, which aims to offer investors exposure to globally-listed stocks and depositary receipts involved in the support and functioning of global distribution supply chains. It holds 94 stocks in its basket, with FedEx accounting for the eighth position at 4.2% share.
Pacer Industrials and Logistics ETF debuted in the space in June last year and has accumulated $1 million in its asset base. It trades in a meager volume of under 100 shares and charges 60 bps in annual fees.