ETF Set to Gain Post FedEx Solid Q2 Earnings

After the closing bell on Dec 16, transport bellwether FedEx FDX delivered solid second-quarter fiscal 2022 results. The courier company beat both revenue and earnings estimates. The parcel company lifted its financial outlook for fiscal 2022.

Driven by impressive results, FDX shares climbed as much as about 5% in after-market hours. As a result, ETFs with the highest allocation to FedEx are expected to gain. These include iShares U.S. Transportation ETF IYT, First Trust Nasdaq Transportation ETF FTXR, SPDR S&P Transportation ETF XTN and Emles Home ETF LIV.

FedEx Earnings in Focus

Earnings per share came in at $4.83, strongly outpacing the Zacks Consensus Estimate of $4.23 and flat with the year-ago earnings. Revenues grew 14% year over year to $23.47 billion and edged past the estimated $22.53 billion. Though FedEx continued to face labor shortages and supply chain disruptions during the quarter, demand for shipping due to higher online orders put the company on a solid footing.

For fiscal 2022, FedEx raised its 2022 adjusted earnings per share guidance to $20.50-$21.50 from $19.75-$21.00. The Zacks Consensus Estimate is pegged at $19.49 (see: all the Industrials ETFs here).

FedEx carries a Zacks Rank #3 (Hold) and has a VGM Score of A. It belongs to a bottom-ranked Zacks Industry (top 18%).

ETFs in Focus

Let’s delve into each ETF below:

iShares U.S. Transportation ETF (IYT)

iShares U.S. Transportation ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 46 securities. Of these, FedEx occupies the seventh position with 4.1% of the assets. Within the transportation sector, railroads, and air freight and logistics take the top two spots with 33.3% and 29.5% share, respectively, while trucking (22.5%) and airlines (13.3%) round off the next two.

iShares U.S. Transportation ETF has accumulated $1.7 billion in AUM while it sees a good trading volume of around 166,000 shares a day. The fund charges 41 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Sector ETFs to Win or Lose on Oil Slump).

First Trust Nasdaq Transportation ETF (FTXR)

First Trust Nasdaq Transportation ETF offers exposure to the 29 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. FedEx holds 3.4% share in the basket. Trucking, automobiles, railroads, airlines, and transport services occupy the top spots in the basket.

First Trust Nasdaq Transportation ETF has amassed $1.2 billion in its asset base and charges 60 bps in annual fees. The average trading volume is moderate at 81,000 shares. The fund has a Zacks ETF Rank #2.

SPDR S&P Transportation ETF (XTN)  

SPDR S&P Transportation ETF follows the S&P Transportation Select Industry Index and uses almost an equal-weight methodology for each security. Holding 46 stocks with an AUM of $862.1 million, FedEx accounts for 2% share in the basket. The product is heavily exposed to trucking, which represents more than 40.7% of the portfolio while airlines, and air freight & logistics make up for nearly 22% share each.

SPDR S&P Transportation ETF charges 35 bps in fees per year from investors and trades in a volume of about 178,000 shares a day, on average. It has a Zacks ETF Rank #2 with a Hugh risk outlook.

Emles Home ETF (LIV)

Emles Home ETF provides investors access to high-quality companies that potentially stand to benefit from the structural shift toward home-based lifestyle by tracking the Emles Home Lifestyle Index. Emles Home ETF holds 31 stocks in its basket with FedEx occupying 1.8% share (read: 5 Stocks Driving Homebuilding ETF to All-Time Highs).

Emles Home ETF has accumulated $3.4 million in its asset and trades in an average daily volume of under 1,000 shares. It charges 49 bps in annual fees and has a Zacks ETF Rank #2.

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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.