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Earnings-Focused ETF (EPS) Hits New 52-Week High

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For investors seeking momentum, WisdomTree Earnings 500 Fund (EPS - Free Report) is probably on radar now. The fund just hit a 52-week high and is up about 26% from its 52-week low price of $26.39/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

EPS in Focus

This fund provides exposure to earnings-generating companies within the large-cap segment of the broad U.S. stock market. It has key holdings in financials, information technology and consumer services that make up for a double-digit exposure each. The ETF charges 8 bps in annual fees (see: all the Large Cap Value ETFs here).

Why the Move?

The earnings-weighted ETF has been an area to watch lately given that corporate results have turned out better than many had expected in the market. Of the 230 S&P members that reported Q1 results through Apr 26, 79.1% have beaten EPS estimates and 58.7% have beaten revenue estimates. The proportion of EPS beats in Q1 at this stage is the second highest for this group of 230 S&P 500 members in the last five years though revenue surprises are modestly on the low side relative to other recent periods. In such a scenario, earnings-weighted ETF have the potential to move higher relative to any other product. As a result, tilting toward this key metric is a sensible choice at present.

More Gains Ahead?

Currently, EPS has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. Further, many of the segments that make up this ETF have a strong Zacks Industry Rank, so there is definitely still some promise for those who want to ride on this surging ETF a little longer.

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