Transport ETFs In Focus Post FedEx Solid Results

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After the closing bell on Dec 17, transport bellwether FedEx (FDX - Free Report) reported stellar fiscal 2021 second-quarter results. The courier company outpaced earnings and revenue estimates.

Earnings per share came in at $4.83, surpassing the Zacks Consensus Estimate of $3.90 and improving from the year-ago earnings of $2.51. Revenues grew 19% year over year to a record $20.6 billion and edged past the estimated $19.3 billion. This is the first time that FedEx has reported sales of more than $20 billion and double the earnings of last year. Robust performances were driven by higher volume growth in FedEx International Priority and U.S. domestic residential package services.

Despite the robust results, FDX shares dropped almost 4% in aftermarket hours. FedEx has a Rank #3 (Hold) and an impressive VGM Score of A. It currently falls under a top-ranked Zacks industry (top 17%).

ETFs in Focus

The FedEx earnings report has put transport ETFs — iShares Dow Jones Transportation Average Fund (IYT - Free Report)SPDR S&P Transportation ETF (XTN - Free Report), and First Trust Nasdaq Transportation ETF (FTXR - Free Report— in focus. All these funds currently have a Zacks ETF Rank #3 (Hold).

IYT

The ETF tracks the Dow Jones Transportation Average Index, giving investors exposure to a small basket of 20 securities. Of these, FedEx occupies the top position with 14.1% of the assets. Within the transportation sector, railroads, and air freight and logistics take the top two spots with 34.6% and 31.3% share, respectively, while trucking (18.2%) and airlines (10.4%) round off the next two. The fund has accumulated $1.5 billion in AUM while it sees a good trading volume of around 214,000 shares a day. It charges 42 bps in fees per year.

XTN

This fund follows the S&P Transportation Select Industry Index and uses almost an equal-weight methodology for each security. Holding 42 stocks with AUM of $429 million, FedEx takes accounts for 2.7% share in the basket. The product is heavily exposed to trucking, which represents more than one-third of the portfolio while airlines, and air freight & logistics make up 28% and 21.5% share, respectively. The fund charges 35 bps in fees per year from investors and trades in an average volume of about 429,000 shares a day.

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