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ETFs in Focus Post Philips Morris' Upbeat Earnings

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This earnings season continues to show broad-based strength seen in the first half of the year. As of Oct 19, 84 companies of the S&P 500, accounting for 22.3% of index total market capitalization, reported Q3 results. Considering these, earnings are up 19.2% year over year on 8.4% higher revenues, with 82.1% topping earnings estimates and 61.9% beating revenue estimates.
 
Phillip Morris International (PM - Free Report) cheered its investors by beating earnings and revenue estimates for the third quarter (see: all the Consumer Staples ETFs).
 
Earnings in Focus
 
Earnings per share came in at $1.44 ahead of the $1.28 Zacks Consensus Estimate and 17 cents better year over year. Revenues improved 0.4% year over year and topped the estimates by $328 million. The quarterly results depict the strong business performance of the company mainly supported by the combustible product range and its favorable pricing policy (read: A Guide to Dividend ETF Investing)
 
Philip Morris maintains its estimated earnings for 2018 in the range of $4.97-$5.02, after considering the existing exchange rates. The Zacks Consensus Estimate for 2018 is $5.01.
 
Market Impact
 
This favorable result helped the market price rise nearly 2% in the pre-market trading session on Oct 18 — the day it reported quarterly results. The stock carries a top VGM Score of B. 
 
However, it presently has a Zacks Rank #4 (Sell) indicating some pain in the near term and belongs to a bottom-ranked Zacks industry (bottom 26%). After all, cigarette shipment volume declined 1.7% to 195.1 billion units in the quarter, heated tobacco unit shipment volume of almost 8.7 billion units fell 11% year over year (read: Guide to E-commerce ETFs).
 
Based on this strong quarterly performance, the ETFs holding the stock could face some positive pricing action.
 
ETFs in Focus
 
Consumer Staples Select Sector SPDR Fund (XLP - Free Report)
 
The fund tracks the Consumer Staples Select Sector Index and comprises 32 holdings. Philip Morris occupies the fifth spot with 8.27% weight. AUM is $9.1 billion and expense ratio is 0.13%. 
 
Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)
 
It tracks the MSCI USA IMI Consumer Staples Index and comprises 89 holdings. The stock presently holds the fifth spot with 8.27% weight. AUM is $311.5 million and expense ratio is 0.08%.
 
Vanguard Consumer Staples ETF (VDC - Free Report)
 
The fund tracks the MSCI US Investable Market Consumer Staples 25/50 Index. It comprises 93 holdings with Philips Morris sitting at the fifth spot with 7.21% weight. AUM is $4.2 billion and expense ratio is 0.10%.
 
iShares U.S. Consumer Goods ETF (IYK - Free Report)
 
The fund tracks the Dow Jones U.S. Consumer Goods Index. It comprises 110 holdings. The Philips Morris stock occupies the fourth spot with weight of 6.69%. AUM is $506.3 million and expense ratio is 0.43%.
 
iShares Evolved U.S. Consumer Staples ETF (IECS - Free Report)
 
It is an actively managed fund comprising 127 holdings, with Philips Morris occupying the fourth spot (5.52% weight). AUM is $3.8 million and expense ratio is 0.18%.
 
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