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Transport ETFs Riding High Post Q3 Earnings

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·4 min read
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  • DAL
  • UPS
  • UAL
  • UNP

Travel has rebounded strongly as the economy is recovering with more Americans being vaccinated, businesses reopening, and consumer confidence growing. A strong summer driving season and rounds of upbeat earnings have added fuel to transportation.

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 topped the estimates on both revenues and earnings. Earnings of $2.71 per share were 19 cents ahead of the consensus mark and the top line of $23.18 billion came in above the estimated $22.6 billion.

Major railroads Union Pacific UNP and Norfolk Southern Corp NSC came up with better-than-expected earnings while Kansas City KSU lagged the consensus earnings estimate. Union Pacific outpaced the earnings estimate by 9 cents and the revenue estimate by $184 million and Norfolk topped the earnings estimate by 17 cents and the revenue estimate by $112 million. Kansas City fell short of the earnings estimate by 5 cents but edged past the revenue estimate by $18 million.

U.S. airlines Delta Air Lines DAL and United Continental UAL delivered better-than-expected results. Delta reported earnings per share of 30 cents, beating the Zacks Consensus Estimate of 15 cents per share. The air carrier incurred loss of $3.30 per share in the year-ago quarter. Revenues of $9.15 billion topped the consensus mark of $8.41 billion. United posted a loss of $1.02 per share, narrower than the Zacks Consensus Estimate of a loss of $1.65 and revenues of $7.75 billion came in above the estimated $7.64 billion (read: Earnings or Oil: What Will Impact the Airlines ETF Ahead?).

Last but not the least, leading trucking carrier J.B. Hunt JBHT beat the estimate for earnings by 11 cents per share and for revenues by $143 million.

ETFs in Focus

The Q3 earnings reports have led to smooth trading in transport ETFs over the past month. As such, iShares U.S. Transportation ETF IYT, SPDR S&P Transportation ETF XTN and First Trust Nasdaq Transportation ETF FTXR have gained in double-digits each. All these products currently have a Zacks ETF Rank #2 (Buy), suggesting their outperformance in the months ahead (see: all the Industrials ETFs here).

IYT

The fund tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 48 securities. The in-focus seven firms make up for a combined 51% share. From a sector perspective, railroads, and air freight & logistics take the largest share at 35.1% and 28.1%, respectively, while trucking and airlines round off the next two spots with a double-digit exposure each. The fund has accumulated $1.8 billion in its asset base and sees a solid trading volume of around 179,000 shares a day. It charges 41 bps in annual fees.

XTN

This fund tracks the S&P Transportation Select Industry Index, holding 48 stocks in its basket. The in-focus firms account for around 2% share each. Further, 38.7% of the portfolio is dominated by trucking while airlines, and air freight & logistics take at least 20% share each. With AUM of $834.4 million, the fund charges 35 bps in fees per year from its investors and trades in a volume of around 126,000 shares a day (read: 5 Sector ETFs to Benefit Despite Downbeat September Jobs Data).

FTXR

This fund 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. The in-focus seven firms represent a combined 20% share. Trucking, railroads, automobiles and airlines are the top sectors accounting for double-digit exposure each. FTXR has amassed $1.2 billion in its asset base and charges 60 bps in annual fees. The average trading volume is a modest 81,000 shares.


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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
Norfolk Southern Corporation (NSC) : Free Stock Analysis Report
 
J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
 
United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
 
Kansas City Southern (KSU) : Free Stock Analysis Report
 
iShares U.S. Transportation ETF (IYT): ETF Research Reports
 
SPDR S&P Transportation ETF (XTN): ETF Research Reports
 
First Trust NASDAQ Transportation ETF (FTXR): ETF Research Reports
 
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