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Walmart Delights Investors: ETFs in Focus

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Walmart (WMT - Free Report) delighted investors with robust first-quarter 2020 results amid coronavirus lockdowns. The mega retailer beat the estimates on both revenues and earnings, and set a record in online sales as millions of consumers stocked up on food and cleaning supplies.

Earnings per share came in at $1.18, missing the consensus estimate by 8cents. Also, the bottom line improved 4.4% from the year-ago earnings. Revenues increased 8.6% year over year to $134.62 billion and edged past the consensus mark of $133.96 billion. U.S. comparable sales soared 10% led by food, consumables, and health and wellness. E-commerce sales surged 74%, driven by strong grocery pickup and delivery services.

Walmart withdrew its fiscal 2021 guidance due to the uncertainty surrounding the coronavirus pandemic.

The earnings beat pushed shares of WMT up 0.7% on the day. The stock currently has a Zacks Rank #3 (Hold) and a VGM Score of B (see: all Consumer Staples ETFs here).

ETFs in Focus

ETFs having the highest allocation to the world's largest brick-and-mortar retailer have been in focus following the results. Below, we have highlighted six of them:

Consumer Staples Select Sector SPDR Fund (XLP - Free Report)

This is the most popular consumer staples ETF with AUM of $15 billion and follows the Consumer Staples Select Sector Index. The fund charges 13 bps in fees per year from investors and trades in heavy volume of nearly 15 million shares a day. In total, the fund holds about 33 securities in its basket with Walmart taking the third spot at 10.1%. From a sector perspective, household products takes the largest share at 25.9% while beverages, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Retail Sales Worst in April: Least & Most Hurt Sector ETFs).

Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)

This fund tracks the MSCI USA IMI Consumer Staples Index, holding 89 stocks in its basket. Out of these, Walmart takes the fourth spot with 9.5% share. The ETF is widely diversified across beverages, household products, food and staples retailing, and food products. It has amassed $638million in its asset base, while trading in moderate volume of around 194,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.

VanEck Vectors Retail ETF (RTH - Free Report)

This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, WMT occupies the third position in the basket with 9.2% share. The product has amassed $97.1 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 18,000 shares per day. RTH has a Zacks ETF Rank #3 with a Medium risk outlook.

First Trust Nasdaq Retail ETF (FTXD - Free Report)

The fund follows the Nasdaq US Smart Retail Index and holds 51 stocks in its basket. WMT takes the second spot with 9.1% of the assets. FTXD has accumulated $3.3 million in its asset base and has an expense ratio of 0.60%. It trades in average daily volume of 4,000 shares. The ETF has a Zacks ETF Rank #3 (read: Retail ETFs in Focus Ahead of Q1 Earnings).

Vanguard Consumer Staples ETF (VDC - Free Report)

This fund manages a $5.1 billion asset base and has exposure to a basket of 93 consumer stocks by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It charges a fee of10 bps per year and trades in a good volume of around 249,000 shares per day on average. Here, Walmart occupies the fourth position in the basket with 8.9% allocation. The product is widely spread across household products, soft drinks, packaged foods & meat, and hypermarkets & supercenters that make up for a double-digit allocation each. The fund has a Zacks ETF Rank #3 with a Medium risk outlook.

iShares Evolved U.S. Discretionary Spending ETF (IEDI - Free Report)

This is an actively managed ETF that employs data science techniques to identify companies with exposure to the discretionary spending sector. Holding 222 stocks in its basket, WMT occupies the third position with 6.9% share. The fund has accumulated $10.4 million in its asset base and charges 18 bps in fees per year. Volume is paltry as it exchanges 11,000 shares a day on average.

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