Send me real-time posts from this site at my email

Q4 Earnings Fail to Impress Transport ETFs

The transportation sector has been affected by the outbreak of coronavirus, which is already turning for the worse into a widespread pandemic. Fourth-quarter earnings hitherto released also don’t paint a rosy picture (read: Wining & Losing ETF Areas on Coronavirus Outbreak).

Total earnings accounting for 75% of the sector’s market capitalization have been reported so far. The bottom line is down 8% on no revenue growth. Earnings and revenue beat ratio came in at 50% each as most industry players managed to surpass on either earnings or revenues and a few on both counts.

For a better understanding, let’s delve into the results of some well-known industry players:

Transportation Earnings in Focus

The world's largest package delivery company United Parcel Service UPS beat on the bottom line but missed on revenues. Earnings of $2.11 were a penny ahead of the consensus mark while the top line of $20.57 billion was marginally below the estimated $20.58 billion. For 2020, the company expects earnings per share in the range of $7.76-$8.06.

Major railroads Union Pacific UNP, Kansas City Southern KSU and Norfolk Southern Corp NSC posted a mixed bag. Union Pacific missed on earnings by a penny but beat on revenues by $47 million while Kansas City surpassed on earnings by a penny and missed on revenues by $5 million. Meanwhile, Norfolk Southern’s earnings came in at 26 cents, above the Zacks Consensus Estimate while revenues were on par with the consensus mark (see: all the Industrials ETFs here).

U.S. airlines Delta Air Lines DAL and United Continental UAL delivered better-than-expected results. Earnings per share at Delta and United Continental trumped the Zacks Consensus Estimate by 30 cents and 3 cents, respectively. Revenues of $11.44 billion for Delta and $10.9 billion for United Continental were above the consensus estimate of $11.34 billion and $10.89 billion, respectively. Delta projects earnings per share guidance of $6.75-$7.75 for 2020 while United Continental expects the same in the range of $11-$13.
Last but not the least, leading trucking carrier J.B. Hunt JBHT missed on earnings by 17 cents per share and its revenues of $2.45 billion fell slightly short of the consensus mark of $2.454 billion.

ETFs in Focus

Mixed results coupled with the impact of the coronavirus outbreak induced a dismal trading scenario for the transport ETFs over the past 10 days. iShares Transportation Average ETF IYT, SPDR S&P Transportation ETF XTN and First Trust Nasdaq Transportation ETF FTXR shed 6.1%, 5.2% and 3.2% of share value, respectively, in the same time frame. All these products have a Zacks ETF Rank #4 (Sell).


The fund tracks the Dow Jones Transportation Average Index, giving investors exposure to a small basket of 20 securities. The in-focus seven firms make up for a combined 49.4% share. From a sector perspective, railroads, and air freight & logistics take the largest share with 36.7% and 21.8% share each while airlines and trucking round off the next two spots with double-digit exposure each. The fund accumulated $521.2 million in AUM and sees a solid trading volume of around 211,000 shares a day. It charges 42 bps in annual fees.


This fund tracks the S&P Transportation Select Industry Index, holding 43 stocks in its basket. The in-focus firms account for not more than 3% share each. Further, 37.1% of the portfolio is dominated by trucking while airlines takes around one-fourth share. With AUM of $117.8 million, the fund charges 35 bps in fees per year from investors and trades in a lower volume of around 12,000 shares a day (read: Top ETF Stories of January 2020).


This fund 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 seven firms represent a combined 30.7% share. Airlines takes the top spot at 34.7% while ground freight & logistics, auto & truck manufacturers as well as auto, truck & motorcycle parts round off the next three. FTXR amassed $1.2 million in its asset base and charges 60 bps in annual fees. Average trading volume amounts to meager 1,000 shares.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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
Kansas City Southern (KSU): Free Stock Analysis Report
Norfolk Southern Corporation (NSC): Free Stock Analysis Report
J.B. Hunt Transport Services, Inc. (JBHT): Free Stock Analysis Report
SPDR S&P Transportation ETF (XTN): ETF Research Reports
iShares Transportation Average ETF (IYT): ETF Research Reports
United Parcel Service, Inc. (UPS): Free Stock Analysis Report
First Trust NASDAQ Transportation ETF (FTXR): ETF Research Reports
To read this article on click here.
Zacks Investment Research
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Welcome!!! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue