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FedEx Falls on Disappointing Fiscal Q2 Earnings: ETFs in Focus

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After the closing bell on Dec 19, transport bellwether FedEx (FDX - Free Report) disappointed investors when it reported its second-quarter fiscal 2024 results. The courier company missed both earnings and revenue estimates and cut the revenue guidance for the fiscal year on an expected drop in demand from the U.S. Postal Service.

Following the results, FDX shares tumbled as much as 9.8% in after-market trade and nearly 10% in pre-market trade at the time of writing. Weak trading is also expected to be felt in the ETF world, especially with respect to the ones with the highest allocation to FedEx. These include ProShares Supply Chain Logistics ETF (SUPL - Free Report) , iShares U.S. Transportation ETF (IYT - Free Report) , Pacer Industrials and Logistics ETF (SHPP - Free Report) and First Trust Nasdaq Transportation ETF (FTXR - Free Report) .

Earnings per share came in at $3.99, lagging the Zacks Consensus Estimate of $4.14 but improving from $3.18 reported a year ago. Revenues fell 3% year over year to $22.16 billion and were shy of the estimated $22.33 billion. This marked the fifth quarterly drop in revenues (see: all the Industrials ETFs here).

For fiscal 2024, the shipping giant forecasts revenues to decline by a low-single-digit percentage versus the prior projection of flat numbers. This marked the second consecutive quarter when FedEx lowered its sales view. Management stated that revenues will continue to be dampened by volatile macroeconomic conditions, which will affect customer demand for its services across transportation companies.

ETFs in Focus

Let’s delve into each ETF below:

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 taking the second spot with 4.6% of the assets. It has amassed $2 million in its asset base and trades in a volume of 300 shares per day. It charges 58 bps in fees per year from investors (read: 5 ETFs to Play Robust Christmas Travel).

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 43 securities. Of these, FedEx takes the sixth spot and makes up for 4.5% of the assets. Within the transportation sector, rail transportation, and air freight and logistics take the top two spots with 26.5% and 23.2% share, respectively, while passenger ground transportation (17.2%) and cargo ground transportation (16.8%) round off the next two.

iShares U.S. Transportation ETF has $991.6 million in AUM while seeing a good trading volume of around 95,000 shares a day. The fund charges 40 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

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 seventh position at 4.3% share (read: all the Industrials ETFs here).

Pacer Industrials and Logistics ETF has accumulated $1.1 million in its asset base. It trades in a meager volume of under 500 shares and charges 60 bps in annual fees.

First Trust Nasdaq Transportation ETF (FTXR - Free Report)

First Trust Nasdaq Transportation ETF offers exposure to the 41 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. FedEx occupies the tenth position in the basket with a 4.08% share. Automobiles, railroads, delivery services and airlines make up for double-digit allocation each.

First Trust Nasdaq Transportation ETF has amassed $40.9 million in its asset base and charges 60 bps in annual fees. The average trading volume is light at 6,000 shares. FTXR has a Zacks ETF Rank #2.

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