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Slew of Solid Q3 Earnings Pushes Transport ETFs Higher

Sweta Killa
·4 min read

The third-quarter earnings picture for the transportation sector has been shaping up strongly. This is especially true as the sector is the second-biggest contributor to Q3 earnings and the third-largest contributor to revenue growth so far. Earnings for 97.2% market capitalization of the sector that has reported already are up 62.3% on 21.5% revenue growth. The earnings and revenue beat ratio of 85.7% and 50%, respectively, is impressive too.

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 5.5%, 8.1% and 7.3%, 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 and lagged revenue estimates. Earnings of $2.99 per share were 15 cents ahead of the consensus mark but the top line of $24.16 billion came in below the estimated $24.28 billion.

Major railroads Union Pacific UNP and Norfolk Southern Corp NSC also came up with better-than-expected earnings. Union Pacific outpaced the consensus earnings estimate by 13 cents and the revenue estimate by $125 million. Norfolk topped the earnings estimate by 46 cents and the revenue estimate by $123 million (read: 5 Favorite Sectors of Q3 Earnings and Their ETFs).

U.S. airlines Delta Air Lines DAL lagged both earnings and revenue estimates while United Continental UAL topped. Delta reported earnings per share of $1.51, falling short of the Zacks Consensus Estimate of $1.56. Revenues of $13.97 billion fell short of the consensus mark of $14.16 billion. United Continental posted earnings of $2.81 per share, outpacing the Zacks Consensus Estimate of $2.21. Revenues of $12.88 billion came in above the estimated $12.67 billion.

Last but not the least, leading trucking carrier J.B. Hunt JBHT beat the estimates for earnings by 12 cents per share and for revenues by $35 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 50 securities. The in-focus six firms make up for a combined 50% share. From a sector perspective, air freight & logistics, and railroads take the largest share at 29% each, while trucking and airlines round off the next two spots with a double-digit exposure each.

iShares U.S. Transportation ETF has accumulated $758.2 million in its asset base and sees a solid trading volume of around 237,000 shares a day. It charges 39 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

SPDR S&P Transportation ETF (XTN)

SPDR S&P Transportation ETF tracks the S&P Transportation Select Industry Index, holding 50 stocks in its basket. The in-focus firms account for around 2% share each. About 38% of the portfolio is dominated by trucking, while airlines, and air freight & logistics take 28.1% and 18.3% share, respectively (read: 4 Sector ETFs to Tap on Rising Inflation).

With AUM of $434.2 million, SPDR S&P Transportation ETF charges 35 bps in fees per year from its investors and trades in a volume of around 38,000 shares a day. It has a Zacks ETF Rank #3 with a Medium risk outlook.

First Trust Nasdaq Transportation ETF (FTXR)

First Trust Nasdaq Transportation ETF offers exposure to the 31 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 21.8% share. Railroads, trucking, automobiles and auto parts are the top sectors accounting for a double-digit exposure each.

First Trust Nasdaq Transportation ETF has amassed $70.1 million in its asset base and charges 60 bps in annual fees. The average trading volume is good at 17,000 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
 
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