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So far, 90.8% of the S&P 500 companies have reported results for Q1, highlighting a 0.5% year-over-year jump in earnings on 5% revenue growth. Almost 76.9% of the companies beat on earnings while 59% surpassed the revenue mark, per the Earnings Trends issued on May 15.
In such an earnings-revenue backdrop, let’s take a look at which ETFs, earnings or revenue-weighted, won this earnings season.
Oppenheimer S&P 500 Revenue ETF (RWL - Free Report) ) (down 1.9%) Versus WisdomTree U.S. Earnings 500 Fund (EPS - Free Report) (down 2.4%)
RWL: Stocks in the fund are graded on the basis of the top line. The top three holdings of the fund are Wal-Mart (4.3%), Apple (2.3%) and Exxon Mobil (2.2%). Healthcare (16.1%), Financials (13.2%), Consumer Cyclical (13.1%) and Consumer Staples (12.7%) are four of the leading sectors. The fund charges 39 bps in fees.
EPS: It offers exposure to the broad U.S. large-cap companies that are profitable. The top three stocks are Apple (5.08%), Microsoft Corp (2.92%) and Berkshire Hathaway (2.58%). The fund charges 8 bps in fees. Financials (21.74%), Information Technology (20.8%), Communication Services (10.63%) and Healthcare (10.30%) round out the top four sectors.
RWK: The same revenue-weighted objective is applied here on the mid-cap level. World Fuel Services Corp. (2.9%), Tech Data Corp. (2.6%) and PBF Energy Inc. (1.9%) are the top three stocks here. The fund charges 39 bps in fees. Industrials (18.8%), Consumer Cyclical (18.4%) and Information Technology (16.1%) are the top three sectors of the fund.
EZM: In this mid-cap earnings-focused ETF, Pulte Homes (1.01%), Huntsman (0.77%) and Chemours Co/The (0.71%) hold the top three spots. Industrials (19.77%), Financials (18.95%) and Consumer Discretionary (15.73%) are three of the leading holdings in the fund. The fund charges 38 bps in fees.
RWJ: This small-cap revenue-weighed fund has Core-Mark Holding (2.06%), Lithia Motors (1.97%) and Group 1 Automotive (1.84%) as its top three holdings. Consumer Cyclical (27.6%), Industrials (20.2%) and Information Technology (12.2%) are the leading sectors of the fund. The net expense ratio of the fund is 0.39%.
EES: This earnings-weighted fund’s top three holdings are Bed Bath & Beyond (0.9%), Lithia Motors (0.9%) and Warrior Met Coal (0.9%). The fund charges 38 bps in fees. Consumer Discretionary (23.39%), Financials (21.1%) and Industrials (19.75%) are the leading sectors of the fund.
Bottom Line
From the chart given above, we can see that the performance of the earnings-weighted ETFs lagged revenue-weighted ETFs for large-caps. But for the other two capitalization, revenue-weighted ETFs underperformed despite stronger growth rates in the top line.
Notably, revenue growth is expected to hit 4.8% in Q1 for the S&P 600 — an index gauging smaller-caps — while earnings growth is expected to be negative 19.4%. This could be due to the fact that revenue-weighted funds mostly stress on the top revenue-generating companies and not on the growth perspective.
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Earnings vs. Revenue Weighted ETFs: Q1 Winner
So far, 90.8% of the S&P 500 companies have reported results for Q1, highlighting a 0.5% year-over-year jump in earnings on 5% revenue growth. Almost 76.9% of the companies beat on earnings while 59% surpassed the revenue mark, per the Earnings Trends issued on May 15.
In such an earnings-revenue backdrop, let’s take a look at which ETFs, earnings or revenue-weighted, won this earnings season.
Oppenheimer S&P 500 Revenue ETF (RWL - Free Report) ) (down 1.9%) Versus WisdomTree U.S. Earnings 500 Fund (EPS - Free Report) (down 2.4%)
RWL: Stocks in the fund are graded on the basis of the top line. The top three holdings of the fund are Wal-Mart (4.3%), Apple (2.3%) and Exxon Mobil (2.2%). Healthcare (16.1%), Financials (13.2%), Consumer Cyclical (13.1%) and Consumer Staples (12.7%) are four of the leading sectors. The fund charges 39 bps in fees.
EPS: It offers exposure to the broad U.S. large-cap companies that are profitable. The top three stocks are Apple (5.08%), Microsoft Corp (2.92%) and Berkshire Hathaway (2.58%). The fund charges 8 bps in fees. Financials (21.74%), Information Technology (20.8%), Communication Services (10.63%) and Healthcare (10.30%) round out the top four sectors.
S&P MidCap 400 Revenue ETF (RWK - Free Report) ) (down 5.9%) Versus WisdomTree U.S. MidCap Earnings ETF (EZM - Free Report) (down 4.3%)
RWK: The same revenue-weighted objective is applied here on the mid-cap level. World Fuel Services Corp. (2.9%), Tech Data Corp. (2.6%) and PBF Energy Inc. (1.9%) are the top three stocks here. The fund charges 39 bps in fees. Industrials (18.8%), Consumer Cyclical (18.4%) and Information Technology (16.1%) are the top three sectors of the fund.
EZM: In this mid-cap earnings-focused ETF, Pulte Homes (1.01%), Huntsman (0.77%) and Chemours Co/The (0.71%) hold the top three spots. Industrials (19.77%), Financials (18.95%) and Consumer Discretionary (15.73%) are three of the leading holdings in the fund. The fund charges 38 bps in fees.
Oppenheimer S&P SmallCap 600 Revenue ETF (RWJ - Free Report) ) (down 4.9%) Versus WisdomTree U.S. SmallCap Earnings ETF (EES - Free Report) (down 4.8%)
RWJ: This small-cap revenue-weighed fund has Core-Mark Holding (2.06%), Lithia Motors (1.97%) and Group 1 Automotive (1.84%) as its top three holdings. Consumer Cyclical (27.6%), Industrials (20.2%) and Information Technology (12.2%) are the leading sectors of the fund. The net expense ratio of the fund is 0.39%.
EES: This earnings-weighted fund’s top three holdings are Bed Bath & Beyond (0.9%), Lithia Motors (0.9%) and Warrior Met Coal (0.9%). The fund charges 38 bps in fees. Consumer Discretionary (23.39%), Financials (21.1%) and Industrials (19.75%) are the leading sectors of the fund.
Bottom Line
From the chart given above, we can see that the performance of the earnings-weighted ETFs lagged revenue-weighted ETFs for large-caps. But for the other two capitalization, revenue-weighted ETFs underperformed despite stronger growth rates in the top line.
Notably, revenue growth is expected to hit 4.8% in Q1 for the S&P 600 — an index gauging smaller-caps — while earnings growth is expected to be negative 19.4%. This could be due to the fact that revenue-weighted funds mostly stress on the top revenue-generating companies and not on the growth perspective.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>