After the closing bell yesterday, NVIDIA (NVDA - Free Report) cheered investors with its fourth-quarter fiscal 2019 results. Though the biggest maker of graphics processors missed on revenue estimates but was better than feared. The company beat the Zacks Consensus Estimate for earnings and also offered an upbeat guidance for the current fiscal year (read: 5 ETFs Hit By NVIDIA's Revenue Guidance Cut).
Shares of NVDA jumped as much as 9% in aftermarket hours.
Q4 Earnings in Focus
Earnings per share came in at 80 cents, crushing the Zacks Consensus Estimate by five cents and decelerating 53% from the year-ago quarter. Revenues dropped 24% year over year to $2.21 billion and missed the estimated $2.37 billion. This represents the first quarterly year-over-year revenue decline in five years and the steepest in nearly a decade as a slowdown in China and a fading cryptocurrency craze weighed on its revenues.
NVIDIA expects revenues of approximately $2.20 billion (+/-2%) for the first quarter of fiscal 2020 and flat-to-slightly-down revenues for the full fiscal year. Though the first-quarter guidance is below the Zacks Consensus Estimate of $2.46 billion, full-year revenue guidance is much above the Zacks Consensus Estimate of a 6.2% decline. Better-than-expected full-year guidance suggests that the company is expecting a significant increase in sales in the second half of its fiscal year (see: all the Technology ETFs here).
At the time of earnings release, NVIDIA has a Zacks Rank #5 (Strong Sell) and VGM Score of D. Moreover, it falls in a bottom-ranked Zacks industry (bottom 4%). However, we are expecting an upgrade in the rank of this chip-maker owing to stronger-than-expected results.
ETFs to Gain
The post-earnings rally in NVIDIA shares is expected to push the ETFs having higher allocation to this graphics chipmaker higher. Below we have highlighted some of them:
ARK Industrial Innovation ETF (ARKQ - Free Report)
This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to energy, automation and manufacturing, materials, and transportation. This approach results in a basket of 35 stocks, with NVDA occupying the fourth spot holding 7.7% share. The product has accumulated $179.5 million in its asset base and charges 75 bps in fees per year. It sees lower volume of about 34,000 shares a day.
VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report)
This fund offers exposure to global companies involved in video game development, e-sports, and related hardware and software by tracking the MVIS Global Video Gaming and eSports Index. Holding 25 stocks in its basket, NVIDIA takes the second spot with 7.2% share. American firms account for one-third of the portfolio while Japan, China and South Korea round off the next three with double-digit allocation. The fund has gathered $10.2 million in its asset base while trading in average daily volume of 7,000 shares. It charges 55 bps in annual fees from investors (read: Top ETF Trends for 2019).
iShares PHLX Semiconductor ETF (SOXX - Free Report)
This ETF offers exposure to 30 U.S. companies that design, manufacture and distribute semiconductors by tracking the PHLX SOX Semiconductor Sector Index. Of these, NVDA takes the fourth spot at 7% allocation. The fund has amassed $1.2 billion in its asset base and charges a fee of 47 bps a year. It trades in solid volume of 865,000 shares and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
ARK Web x.0 ETF (ARKW - Free Report)
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 36 stocks in its basket, with NVIDIA occupying the top position at 6.9%. The ETF has amassed $179.5 million in its asset base and trades in a good average daily volume of around 152,000 shares. Expense ratio comes in at 0.75%
VanEck Vectors Semiconductor ETF (SMH - Free Report)
This ETF has AUM of $978.7 million and average daily volume of about 152,000 shares. The fund provides exposure to 25 global securities by tracking the MVIS US Listed Semiconductor 25 Index. NVIDIA occupies the fifth spot with 5.1% of the assets. While American firms dominate the fund’s holdings with 79.4% assets, the Netherlands (9.6%), Taiwan (9%) and Switzerland (2%) round off the top four in terms of country exposure. The fund charges an expense ratio of 0.35%. It has a Zacks ETF Rank #3 with a High risk outlook (read: Sector ETFs & Stocks to Rally on US-Sino Trade Hopes).
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