Consumer Discretionary ETFs Leading This Earnings Season

The Q4 earnings season has been weak so far with growth materially below the pace set in the first three quarters of the year. Total earnings for 85.6% of the S&P 500 total market capitalization that has reported results so far are up 12.9% from the same period last year on 7.6% revenue growth. Earnings and revenue growth for the same cohort of companies was 25.1% and 9.5%, respectively, in the preceding earnings season.

Earnings and revenue beat ratio is also less encouraging with 66.5% beating EPS estimates and 62.4% beating revenue estimates. For the same cohort of companies, the proportion of positive EPS and revenue surprises was 78.4% and 62.4%, respectively, in the Q3 earnings season. In fact, the Q4 EPS beat percentage is the lowest in more than five years.

Still, eight of the 16 Zacks sectors have posted double-digit earnings growth so far, while three sectors’ earnings growth is negative. If we go by the price impact in response to earnings announcement, conglomerates is spearing ahead with 5% gain in the sector, closely followed by gain of 3.6% for consumer discretionary and 3.1% for transport sectors. 

Total earnings for 90.8% of the consumer discretionary total market capitalization that has been reported so far is up 12.4% on revenue growth of 12.9%, with earnings and revenue beat ratio of 80.8% and 65.4%, respectively. While earnings beat ratio is the third strongest, revenue growth is the second-largest contributor to the S&P 500 index. Thanks to these trends, consumer discretionary ETFs are leading the pack this earnings season.

While most of them are rising over the past month, we have highlighted five that have been beating the broad market fund (SPY - Free Report) by wide margins.

Amplify Online Retail ETF (IBUYFree Report)

This ETF has attracted $294.5 million in its asset base. It offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund is home to 41 stocks that are widely diversified, with each holding less than 4.3% of assets. The product charges 65 bps in fees per year and has gained 8.2% in a month.

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