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A Look at Transport ETFs Post Q1 Earnings

Sweta Killa
·4-min read

The first-quarter earnings picture for the transportation sector has been solid. This is especially true as the sector is the largest contributor to the earnings growth so far. Earnings for 100% market capitalization of the sector are up 56.9% on 5% revenue growth. But, the earnings and revenue beat ratio of 60% and 26.7%, respectively, is not so impressive.

The wave of strong results pushed transportation ETFs higher over the past month. iShares U.S. Transportation ETF IYT, SPDR S&P Transportation ETF XTN and First Trust Nasdaq Transportation ETF FTXR are up 2.4%, 2.8% and 0.1%, respectively (see: all the Industrials ETFs here).

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 surpassed the Zacks Consensus Estimate for earnings but lagged revenue estimates. Earnings of $2.20 per share were a penny ahead of the consensus mark but the top line of $22.92 billion came in below the estimated $22.93 billion.

Major railroads Union Pacific UNP and Norfolk Southern Corp NSC came up with an earnings beat each but the former missed on revenues. Earnings of $2.67 per share at UNP surpassed the Zacks Consensus Estimate of $2.57 but missed marginally on revenues. Meanwhile, Norfolk topped the earnings estimate by 17 cents and the revenue estimate by $32 million.

U.S. airlines Delta Air Lines DAL reported dismal results, while United Continental UAL reported better-than-expected results. Delta reported earnings per share 25 cents, which missed the Zacks Consensus Estimate of 29 cents. Revenues of $12.76 billion also fell short of the consensus mark of $12.77 billion. United Continental reported first-quarter 2023 loss of 63 cents per share, narrower than the Zacks Consensus Estimate of a loss of 73 cents. Revenues of $11.43 billion came in above the estimated $11.42 billion (read: Forget Mixed Airlines Earnings: Play JETS ETF on Upbeat Outlook).

Last but not least, leading trucking carrier J.B. Hunt JBHT missed the estimates for earnings by 15 cents per share and for revenues by $205 million.

ETFs in Focus

iShares U.S. Transportation ETF (IYT)

iShares U.S. Transportation ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 47 securities. The in-focus six firms make up for a combined 48.9% share. From a sector perspective, air freight & logistics, and rail transportation take the largest share at 30.9% and 26.5% share, respectively, while passenger airlines and other airlines round off the next two spots with a double-digit exposure each.

iShares U.S. Transportation ETF has accumulated $822.9 million in its asset base and sees a solid trading volume of around 190,000 shares a day. It charges 39 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: 5 ETFs to Play as Inflation Cools Down to 5%).

SPDR S&P Transportation ETF (XTN)

SPDR S&P Transportation ETF tracks the S&P Transportation Select Industry Index, holding 47 stocks in its basket. The in-focus firms account for around 2% share each. About 30% of the portfolio is dominated by cargo ground transportation, while passenger airlines, air freight & logistics round off the next two with double-digit exposure each.

With AUM of $215.3 million, SPDR S&P Transportation ETF charges 35 bps in fees per year from its investors and trades in a volume of around 33,000 shares a day. It has a Zacks ETF Rank #2 with a High risk outlook.

First Trust Nasdaq Transportation ETF (FTXR)

First Trust Nasdaq Transportation ETF offers exposure to the 30 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. The in-focus six firms represent a combined 29.5% share. Delivery services, railroads, automobiles, trucking,    and commercial vehicle-equipment leasing are the top sectors accounting for double-digit exposure each.

First Trust Nasdaq Transportation ETF has amassed $45 million in its asset base and charges 60 bps in annual fees. The average trading volume is good at 9,000 shares. FTXR has a Zacks ETF Rank #2.

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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

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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Zacks Investment Research