Walmart Solid Q2 Results Put These ETFs in Focus
Walmart WMT delighted investors with robust second-quarter 2020 results amid the pandemic. The mega retailer beat the estimates on both revenues and earnings, and posted the biggest-ever growth in online sales (read: ETFs in Focus as Big-Box Retailers Line Up for Q2 Earnings).
Earnings per share came in at $1.56, outpacing the Zacks Consensus Estimate by 34 cents. Also, the bottom line improved 22.8% from the year-ago earnings. Revenues increased 5.6% year over year to $137.7 billion and edged past the consensus mark of $134.9 billion.
U.S. comparable sales soared 9.3% fueled by demand for food and general merchandise. E-commerce sales surged 97% as consumers increasingly turned online to shop for everything from electronics and toys to groceries during the pandemic (read: ETFs to Benefit From Surge in E-Commerce Sales).
The solid results pushed shares of Walmart to new highs but the stock fell 0.7% to close the day. Walmart currently has a Zacks Rank #3 (Hold) and a VGM Score of A.
ETFs in Focus
ETFs having the highest allocation to the world's largest brick-and-mortar retailer have been in focus following the results. Below we have highlighted six of them:
Consumer Staples Select Sector SPDR Fund XLP
This is the most-popular consumer staples ETF with AUM of $13.9 billion and follows the Consumer Staples Select Sector Index. The fund charges 13 bps in fees per year from investors and trades in heavy volume of nearly 9.3 million shares a day. In total, the fund holds about 33 securities in its basket with Walmart taking the second spot at 9.8%. From a sector perspective, household products takes the largest share at 26.9% while beverages, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
Fidelity MSCI Consumer Staples Index ETF FSTA
This fund tracks the MSCI USA IMI Consumer Staples Index, holding 90 stocks in its basket. Out of these, Walmart takes the third spot with 9% share. The ETF is widely diversified across household products, beverages, food and staples retailing, and food products. It has amassed $714.6 million in its asset base, while trading in moderate volume of around 177,000 shares a day, on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #5 (Strong Sell) with a Medium risk outlook.
VanEck Vectors Retail ETF RTH
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, WMT occupies the third position in the basket with 8.8% share. The product has amassed $149.4 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 17,000 shares per day. RTH has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Retail ETF Hits New 52-Week High).
First Trust Nasdaq Retail ETF FTXD
The fund follows the Nasdaq US Smart Retail Index and holds 51 stocks in its basket. WMT takes the fifth spot with 7% of the assets. FTXD has accumulated $3.9 million in its asset base and has an expense ratio of 0.60%. It trades in average daily volume of 1,000 shares and has a Zacks ETF Rank #3.
Vanguard Consumer Staples ETF VDC
This fund manages a $5.6 billion asset base and has exposure to a basket of 94 consumer stocks by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It charges a fee of 10 bps per year and trades in a good volume of around 152,000 shares per day on average. Here, Walmart occupies the fourth position in the basket with 8.7% allocation. The product is widely spread across household products, soft drinks, packaged foods & meat, and hypermarkets & supercenters that make up for a double-digit allocation each. The fund has a Zacks ETF Rank #5 (Strong Sell) with a Medium risk outlook (see: all Consumer Staples ETFs here).
iShares Evolved U.S. Discretionary Spending ETF IEDI
This is an actively managed ETF that employs data science techniques to identify companies with exposure to the discretionary spending sector. Holding 221 stocks in its basket, WMT occupies the fourth position with 6% share. The fund has accumulated $12.5 million in its asset base and charges 18 bps in fees per year. Volume is paltry as it exchanges 3,000 shares a day, on average.
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Walmart Inc. (WMT) : Free Stock Analysis Report
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
VanEck Vectors Retail ETF (RTH): ETF Research Reports
Fidelity MSCI Consumer Staples Index ETF (FSTA): ETF Research Reports
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
First Trust NASDAQ Retail ETF (FTXD): ETF Research Reports
iShares Evolved U.S. Discretionary Spending ETF (IEDI): ETF Research Reports
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