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Industrial ETFs in Focus Post Q3 Earnings


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The earnings season is in full swing now, taking our focus to the earnings performance of some industrial behemoths. Due to the trade tensions between the United States and China and rising rate concerns, the sector is under scrutiny (see: all the Industrial ETFs here ).

Per the  Earnings Trends  issued on (Oct 31), 313 S&P 500 members have reported Q3 results. Earnings are up 22.7% from the year-ago quarter on 8.4% higher revenues with 78% beating EPS estimates and 62.6% beating revenue estimates.

Below we highlight the earnings reports from General Electric GE , 3M Company MMM , Honeywell HON and Union Pacific UNP to understand where the sector is headed this season:

3M Company

3M Company reported disappointing results on Oct 23 for third-quarter 2018, with both earnings and revenues missing estimates. 3M reported EPS of $2.58, missing the Zacks Consensus Estimate by 12 cents. It increased 25 cents from the year-ago quarter. Revenues reported at $8.15 billion missed estimates by $269 million. Year-ago quarter revenues were reported at $8.17 billion (read: Aerospace and Defense ETFs Dip Despite Strong Q3 Earnings ).

3M Company has revised down its adjusted earnings guidance for 2018 from $10.20-$10.45 to $9.90-$10.00 per share. Organic sales growth guidance has been revised down to about 3% from 3-4% projected earlier. If possible, you can mention the price performance since reporting earnings.

Honeywell

The company delivered positive surprise of 2.01% and 0.29%, respectively, for both earnings and sales. Earnings increased nearly 16% up from the year-ago quarter, while revenues were up nearly 6.3%. The company lowered its earnings view for 2018 from $8.10-$8.20 per share to $7.95-$8.00 (read: Alphabet Reports Mixed Results: ETFs in Focus ).

Union Pacific

Union Pacific reported Q3 earnings of $2.15, beating the Zacks Consensus Estimate by 6 cents and improving 50% year over year. Revenues were reported at $5.93 billion delivering a positive surprise of $50 million. Year-ago quarter revenues were reported at $5.41 billion.

General Electric

General Electric reported EPS of 14 cents missing the Zacks Consensus Estimate by 7 cents. It improved form the year-ago quarter EPS of 29 cents. Revenues were reported at $29.57 billion missing the Zacks Consensus Estimate by $707 million. The year-ago quarter revenues were reported $30.81 billion.

Industrial ETFs in Focus

In the current scenario, it would be prudent to discuss the industrials ETFs that have a relatively high exposure to the companies discussed. These ETFs have dipped post results (as on Oct 30):

Industrial Select Sector SPDR Fund XLI

This fund tracks the Industrial Select Sector Index comprising 72 holdings. It has a 5.2% allocation to 3M Co, 5.2% to Honeywell, 4.7% to General Electric and 5% to Union Pacific. AUM is $11.8 billion and expense ratio is 0.13%. It has lost 5.6% since these companies reported their results and has lost 7.2% year to date. It carries a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

Vanguard Industrials ETF VIS

This ETF tracks the MSCI US Investable Market Index (IMI)/Industrials 25/50 comprising 351 holdings. It has a 3.6% allocation to General Electric, 4.0% to 3M, 4% to Union Pacific and 4% to Honeywell. AUM is $3.69 billion and expense ratio charged is 0.10%. It has lost 5.3% since these companies reported their results and 8.1% year to date. It carries a Zacks ETF Rank #2 with a Medium risk outlook.

iShares U.S. Industrials ETF IYJ

It tracks the Dow Jones U.S. Industrials Index comprising 218 holdings. It has a 3.4% allocation to 3M Co, 3.5% to Honeywell, 3.1% to General Electric and 3.3% to Union Pacific. The fund has lost 4.8% since the release of results and 6% year to date. AUM is $967 million and expense ratio is 0.43% and carries a Zacks ETF Rank #2 with a Medium risk outlook.

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Union Pacific Corporation (UNP): Free Stock Analysis Report

Honeywell International Inc. (HON): Free Stock Analysis Report

3M Company (MMM): Free Stock Analysis Report

General Electric Company (GE): Free Stock Analysis Report

ISHARS-US INDU (IYJ): ETF Research Reports

SPDR-INDU SELS (XLI): ETF Research Reports

VIPERS-INDUS (VIS): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Earnings , ETFs
Referenced Symbols: UNP , HON , MMM , GE , IYJ



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