Slew Of Solid Q3 Earnings Pushes Transport ETFs Higher

Mockup, Typewriter, Word, Money, Wall Street, Etf

Image Source: Pixabay

The third-quarter earnings picture for the transportation sector has been shaping up strongly. This is especially true as the sector is the second-biggest contributor to Q3 earnings and the third-largest contributor to revenue growth so far. Earnings for 97.2% market capitalization of the sector that has been reported already are up 62.3% on 21.5% revenue growth. The earnings and revenue beat ratio of 85.7% and 50%, respectively, is impressive too.

The wave of strong results pushed transportation ETFs higher over the past month. iShares U.S. Transportation ETF (IYT - Free Report), SPDR S&P Transportation ETF (XTN - Free Report), and First Trust Nasdaq Transportation ETF (FTXR - Free Report) are up 5.5%, 8.1%, and 7.3%, respectively.

For a better understanding, let’s delve into the results of some well-known industry players:

Transportation Earnings in Brief

The world's largest package delivery company United Parcel Service (UPS - Free Report) surpassed the Zacks Consensus Estimate for earnings and lagged revenue estimates. Earnings of $2.99 per share were 15 cents ahead of the consensus mark but the top line of $24.16 billion came in below the estimated $24.28 billion.

Major railroads Union Pacific (UNP - Free Report) and Norfolk Southern Corp (NSC - Free Report) also came up with better-than-expected earnings. Union Pacific outpaced the consensus earnings estimate by 13 cents and the revenue estimate by $125 million. Norfolk topped the earnings estimate by 46 cents and the revenue estimate by $123 million.

U.S. airlines Delta Air Lines (DAL - Free Report) lagged both earnings and revenue estimates while United Continental (UAL - Free Report) topped. Delta reported earnings per share of $1.51, falling short of the Zacks Consensus Estimate of $1.56. Revenues of $13.97 billion fell short of the consensus mark of $14.16 billion. United Continental posted earnings of $2.81 per share, outpacing the Zacks Consensus Estimate of $2.21. Revenues of $12.88 billion came in above the estimated $12.67 billion.

Last but not the least, leading trucking carrier J.B. Hunt (JBHT - Free Report) beat the estimates for earnings by 12 cents per share and for revenues by $35 million.

ETFs in Focus

iShares U.S. Transportation ETF (IYT Quick)

iShares U.S. Transportation ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 50 securities. The in-focus six firms make up a combined 50% share. From a sector perspective, air freight & logistics, and railroads take the largest share at 29% each, while trucking and airlines round off the next two spots with double-digit exposure each.

iShares U.S. Transportation ETF has accumulated $758.2 million in its asset base and sees a solid trading volume of around 237,000 shares a day. It charges 39 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

SPDR S&P Transportation ETF (XTN)

SPDR S&P Transportation ETF tracks the S&P Transportation Select Industry Index, holding 50 stocks in its basket. The in-focus firms account for around 2% share each. About 38% of the portfolio is dominated by trucking, while airlines and air freight & logistics take 28.1% and 18.3% share, respectively.

With an AUM of $434.2 million, SPDR S&P Transportation ETF charges 35 bps in fees per year from its investors and trades in a volume of around 38,000 shares a day. It has a Zacks ETF Rank #3 with a Medium risk outlook.

First Trust Nasdaq Transportation ETF (FTXR)

First Trust Nasdaq Transportation ETF offers exposure to the 31 most-liquid U.S. transportation securities based on volatility, value, and growth by tracking the Nasdaq US Smart Transportation Index. The in-focus six firms represent a combined 21.8% share. Railroads, trucking, automobiles, and auto parts are the top sectors accounting for double-digit exposure each.

First Trust Nasdaq Transportation ETF has amassed $70.1 million in its asset base and charges 60 bps in annual fees. The average trading volume is good at 17,000 shares.

More By This Author:

Growth And Financial: 2 ETFs To Watch For Outsized Volume
Top-Ranked ETFs That Beat The Market In October
Earnings Erase $350B From Big Tech: 5 ETFs With Strength

Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

How did you like this article? Let us know so we can better customize your reading experience.