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What Lies Ahead for FAANG ETFs in Q4 Earnings

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Sweta Killa
·5 min read
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The global digitization wave has given a push to e-commerce for everything ranging from remote working to entertainment and shopping, providing a boost to the FAANG stocks — Facebook FB, Amazon AMZN, Apple AAPL, Netflix NFLX and Alphabet GOOGL. The trend is likely to continue with most of the companies likely to beat earnings estimates when they report this week and the next.

Streaming giant Netflix NFLX, the first company in the FAANG group to report Q4 earnings, came up with encouraging results on Jan 19. The company registered better-than-expected subscriber growth in the fourth quarter of 2020 (read: Netflix Pops on Solid Q4 Subscriber Growth: ETFs to Bet On).

Facebook

Facebook is expected to release its earnings report on Jan 27 after market close. It has a Zacks Rank #2 (Buy) and an Earnings ESP of -0.66%. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The social media giant has seen positive earnings estimate revision of couple of cents for the to-be-reported quarter over the past seven days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The current Zacks Consensus Estimate for the yet-to-be reported quarter indicates a substantial earnings growth of 25.8% from the year-ago reported figure. Revenues are expected to increase 24.6%. Facebook delivered an earnings surprise of 16.28%, on average, in the last four quarters. The stock has a Growth Score of B and belongs to a top-ranked Zacks industry (top 41%). Shares of FB were down nearly 2% in the past three months (read: Don't Fear, Buy the Dip in Tech ETFs).

Facebook, Inc. Price, Consensus and EPS Surprise

Facebook, Inc. Price, Consensus and EPS Surprise
Facebook, Inc. Price, Consensus and EPS Surprise

Facebook, Inc. price-consensus-eps-surprise-chart | Facebook, Inc. Quote

Amazon

Amazon, slated to report on Feb 2 after market close, has a Zacks Rank #3 and an Earnings ESP of +8.92%. The stock saw positive earnings estimate revision of 4 cents over the past 30 days for the fourth quarter. The Zacks Consensus Estimate represents substantial year-over-year earnings growth of 8.2% and revenue growth of 37.5%.

Amazon’s earnings surprise history is impressive, with an average beat of 150.68% for the last four quarters. Additionally, the stock has a top Growth Score of A and falls under a bottom-ranked Zacks industry (bottom 15%). The online e-commerce behemoth has witnessed share price increase of 2.5% in the past three months.

Amazon.com, Inc. Price, Consensus and EPS Surprise

Amazon.com, Inc. Price, Consensus and EPS Surprise
Amazon.com, Inc. Price, Consensus and EPS Surprise

Amazon.com, Inc. price-consensus-eps-surprise-chart | Amazon.com, Inc. Quote

Apple

Apple has a Zacks Rank #2 and an Earnings ESP of +0.00%. The stock saw no earnings estimate revision over the past 30 days for the fiscal first quarter and its earnings surprise history is strong. It delivered an earnings surprise of 16.20%, on average, over the past four quarters. Apple is expected to report substantial earnings growth of 11.2% from the year-ago quarter. Revenues are expected to increase 11.8% year over year. It belongs to a top-ranked Zacks industry (top 3%). The stock has rallied more than 20% over the past three months. Apple is set to report earnings on Jan 27 after market close.

Apple Inc. Price, Consensus and EPS Surprise

Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. Price, Consensus and EPS Surprise

Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote

Alphabet

Alphabet has a Zacks Rank #2 and an Earnings ESP of +0.36%. It saw solid earnings estimate revision of 26 cents over the past 30 days for the to-be-reported quarter and its earnings are expected to grow 3.6%. Its earnings surprise track over the past four quarters is good with the beat being 19.8%, on average. Revenues are expected to grow 17.3% from the year-ago quarter. Additionally, the stock falls under a top-ranked Zacks industry (top 41%). The Internet behemoth has surged more than 21% in the past three months. The company will report after the closing bell on Feb 2 (see: all the Technology ETFs here).

Alphabet Inc. Price, Consensus and EPS Surprise

Alphabet Inc. Price, Consensus and EPS Surprise
Alphabet Inc. Price, Consensus and EPS Surprise

Alphabet Inc. price-consensus-eps-surprise-chart | Alphabet Inc. Quote

ETFs to Tap

Given this, investors may want to play these stocks with the help of ETFs. Below we have highlighted five ETFs having the largest exposure to FAANGs.

MicroSectors FANG+ ETN FNGS: This ETN accounts for 10% share in each of the FAANG stocks and has a Zacks ETF Rank #3.

Invesco QQQ QQQ: This fund makes up for 29.3% share in FAANGs and has a Zacks ETF Rank #1 with a Medium risk outlook.

iShares Evolved U.S. Technology ETF IETC: This fund accounts for 30.2% share in FAANG stocks.

iShares North American Tech ETF IGM: This product accounts for about 28.6% in the FAANG group and has a Zacks ETF Rank #3 with a Medium risk outlook.

iShares Russell 1000 Growth ETF IWF: This ETF allocates a combined 26.2% share in FAANG stocks and has a Zacks ETF Rank #1 with a Medium risk outlook (read: 4 Best-Performing Small-Cap Growth ETFs in 2020).

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

Apple Inc. (AAPL) : Free Stock Analysis Report

Netflix, Inc. (NFLX) : Free Stock Analysis Report

Invesco QQQ (QQQ): ETF Research Reports

Facebook, Inc. (FB) : Free Stock Analysis Report

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

iShares Expanded Tech Sector ETF (IGM): ETF Research Reports

iShares Russell 1000 Growth ETF (IWF): ETF Research Reports

iShares Evolved U.S. Technology ETF (IETC): ETF Research Reports

MICRSFANG (FNGS): ETF Research Reports

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