Back to top

Image: Bigstock

Transport ETFs in Focus Post Q2 Earnings

Read MoreHide Full Article

The transportation sector has been performing remarkably well over the past few weeks on a resilient economy backed by solid consumer spending and lower unemployment. iShares U.S. Transportation ETF (IYT - Free Report) , SPDR S&P Transportation ETF (XTN - Free Report) and First Trust Nasdaq Transportation ETF (FTXR - Free Report) have risen 3.5%, 1.4% and 1%, respectively, over the past month.

The second-quarter earnings picture for the transportation sector has also been solid. This is especially true as the sector is the third-largest contributor to earnings growth so far. Earnings for 72.4% of the market capitalization of the sector are up 17.4% on 1.3% revenue growth. However, the earnings and revenue beat ratios of 66.7% and 50%, respectively, are not so impressive.

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) surpassed the Zacks Consensus Estimate for earnings but lagged the same for revenues. Earnings of $2.54 per share were 3 cents ahead of the consensus mark but revenues of $22 billion came in below the estimated $22.88 billion (see: all the Industrials ETFs here).

Major railroads Union Pacific (UNP - Free Report) and Norfolk Southern Corp (NSC - Free Report) missed estimates on both fronts. UNP missed earnings estimates by 18 cents and revenue estimates by $158 million. Meanwhile, Norfolk lagged earnings and revenue estimates by 20 cents and $92 million, respectively.

U.S. airlines Delta Air Lines (DAL - Free Report) and United Airlines (UAL - Free Report) reported better-than-expected results. Delta reported earnings per share of $2.68, which outpaced the Zacks Consensus Estimate of $2.52. Revenues of $15.58 billion also edged past the consensus mark of $14.91 billion. United Airlines reported earnings of $5.03, which handily beat the Zacks Consensus Estimate of $3.99. Revenues of $14.18 billion came in above the estimated $13.93 billion.

Last but not least, leading trucking carrier J.B. Hunt (JBHT - Free Report) missed estimates for earnings by 16 cents per share and for revenues by $215 million.

ETFs in Focus

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. The six in-focus firms make up a combined 47.7% share. From a sector perspective, air freight & logistics, and rail transportation take the largest share at 28.3% and 25.2% share, respectively, while cargo ground transportation, passenger airlines and passenger ground transportation round off the next three spots with a double-digit exposure each.

iShares U.S. Transportation ETF has accumulated $1.2 billion in its asset base and sees a solid trading volume of around 172,000 shares a day. It charges 39 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Transportation ETFs Rally on Soft Landing Optimism).

SPDR S&P Transportation ETF (XTN - Free Report)

SPDR S&P Transportation ETF tracks the S&P Transportation Select Industry Index, holding 46 stocks in its basket. The in-focus firms account for around 2% share each. About 31% of the portfolio is dominated by cargo ground transportation, while passenger airlines, air freight & logistics round off the next two with double-digit exposure each.

With AUM of $258 million, SPDR S&P Transportation ETF charges 35 bps in fees per year from its investors and trades in a volume of around 30,000 shares a day. It has a Zacks ETF Rank #2 with a High risk outlook.

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. The in-focus six firms represent a combined 29% share. Delivery services, automobiles, railroads, trucking, and commercial vehicle-equipment leasing are the top sectors, accounting for double-digit exposure each (read: 5 ETFs to Ride On Solid Q2 Economic Growth).

First Trust Nasdaq Transportation ETF has amassed $59.6 million in its asset base and charges 60 bps in annual fees. The average trading volume is good at 15,000 shares. FTXR has a Zacks ETF Rank #2.

Published in