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FAANG ETFs in the Spotlight Ahead of Q1 Earnings

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After hitting new highs in February, the FAANG stocks — Facebook (FB - Free Report) , Amazon AMZN, Apple AAPL, Netflix NFLX and Alphabet (GOOGL - Free Report) — were crushed by the coronavirus-led market rout in March. However, the social distancing and stay-at-home mandates led to increased demand for two of the FAANGs – Netflix and Amazon (read: ETFs Set to Benefit from Social Distancing, Stay-At-Home).

Netflix is seeing a huge surge in its online movie and TV streaming service while Amazon’s cloud business Amazon Web Services (AWS) and its home delivery service are gaining with people staying indoors.

Facebook

Facebook is expected to release its earnings report on Apr 29 after market close. Our proven model predicts lower chances of beating estimates for Facebook this time around as it has a Zacks Rank #3 (Hold) and an Earnings ESP of -3.59%. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The social media giant has seen negative earnings estimate revision of 13 cents for the to-be-reported quarter over the past month. Analysts decreasing estimates right before earnings — with the most up-to-date information possible — is not a good indicator for the stock. Additionally, Facebook came up with an average negative earnings surprise of 22.08% for the last four quarters. However, the current Zacks Consensus Estimate for the yet-to-be reported quarter indicates earnings increase of 109.4% from the year-ago reported figure. The stock has a Growth Score of B and belongs to a top-ranked Zacks industry (placed at the top 11% of the total 250+ industries in the Zacks universe). Shares of FB were up 21% in a month.

Amazon

Amazon, slated to report on Apr 23 after market close, has a Zacks Rank #3 and an Earnings ESP of -1.67%. The stock witnessed negative earnings estimate revision of 7 cents over the past 30 days for the fiscal first quarter. The Zacks Consensus Estimate represents a substantial year-over-year decline of 10.4%.

However, Amazon’s earnings surprise history is impressive, with a positive earnings surprise of 27.47% on average for the last four quarters. Additionally, the company is expected to report revenue growth of 22.4%. The stock has a top Growth Score of A and falls under a top-ranked Zacks industry (top 23%). The online e-commerce behemoth has witnessed a share price increase of 24.8% in a month (read: Rising Work-From-Home Trend to Boost 5 Industries & ETFs).

Apple

Apple has a Zacks Rank #3 and an Earnings ESP of +0.51%, indicating reasonable chance of beating estimates this quarter. The stock saw negative earnings estimate revision of 20 cents over the past 30 days for the first quarter. Apple is expected to post substantial earnings decline of 14.6% from the year-ago quarter. Revenues are expected to decrease 6.9% year over year. However, the company’s earnings surprise history is strong. It delivered a positive earnings surprise of 6.05%, on average, over the past four quarters. It has a Growth Score of B and belongs to a top-ranked Zacks industry (top 17%). The stock has rallied 26% in a month. Apple is set to report earnings on Apr 30 after market close (see: all the Technology ETFs here).

Netflix

Netflix has a Zacks Rank #2 (Buy) and an Earnings ESP of +2.38%, indicating higher probability of beating estimates this quarter. It saw no earnings estimate revision over the past 30 days for the to-be-reported quarter and its earnings are expected to increase a whopping 111.8%. Additionally, the stock has a Momentum Score of A and falls under a top-ranked Zacks industry (top 26%). Its earnings surprise track over the past four quarters is robust with the beat being 57.62%, on average. Revenues are expected to increase 26.1% from the year-ago quarter. The video streaming giant has surged 17.4% in a month. The company will report after the closing bell on Apr 21.

Alphabet

Alphabet has a Zacks Rank #3 and an Earnings ESP of -5.19%. It saw negative earnings estimate revision of 73 cents over the past 30 days for the to-be-reported quarter and its earnings are expected to decline 6.2%. Additionally, the stock has a Growth Score of A and falls under a top-ranked Zacks industry (top 33%). However, its earnings surprise track over the past four quarters is good with the beat being 9.27%, on average. Revenues are expected to increase 12.85% from the year-ago quarter. The Internet behemoth has gained 21.3% in the past month. The company will report after the closing bell on May 4.

ETFs to Tap

Given this, investors may want to play these stocks with the help of ETFs. Below, we have highlighted five ETFs having the largest exposure to FAANGs.

MicroSectors FANG+ ETN (FNGS - Free Report) : This ETN accounts for 10% share in each of the FAANG stocks (read: Tesla Makes a Comeback: ETFs to Ride On).

Invesco QQQ (QQQ - Free Report) : This fund makes up for 31.1% share in FAANGs and has a Zacks ETF Rank #1 with a Medium risk outlook.

iShares North American Tech ETF (IGM - Free Report) : This product accounts for about 29.1% in the FAANG group and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

iShares Evolved U.S. Technology ETF (IETC - Free Report) : This fund accounts for 28.9% share in FAANG stocks.

iShares Russell 1000 Growth ETF (IWF - Free Report) : This ETF allocates a combined 22% share in FAANG stocks and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

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