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Wave of Solid Q2 Earnings Pushes Transport ETFs Higher

Sweta Killa
·4-min read

The second-quarter earnings picture for the transportation sector has been shaping up strongly. This is especially true as the sector is the biggest contributor to both Q2 earnings and revenue growth so far. Earnings for 89.3% market capitalization of the sector that has reported already are up 128.1% on 32.4% revenue growth. The earnings and revenue beat ratio of 63.6% and 100%, respectively, is impressive too.

The wave of strong results pushed tarnsporattion 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 10%, 14.1% and 13.5%, 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 both earnings and revenues. Earnings of $3.29 per share were 15 cents ahead of the consensus mark and the top line of $24.77 billion came in above the estimated $24.7 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 11 cents and the revenue estimate by $164 million. Norfolk topped the earnings estimate by a penny and the revenue estimate by $115 million.

Both U.S. airlines Delta Air Lines DAL and United Continental UAL missed earnings estimates but beat on revenues. Delta reported earnings per share of $1.44, falling short of the Zacks Consensus Estimate of $1.71. Revenues of $13.82 billion topped the consensus mark of $13.5 billion. United Continental posted earnings of $1.43 per share, missing the Zacks Consensus Estimate of a loss of $1.86. Revenues of $12.1 billion came in above the estimated $11.9 billion.

Last but not the least, leading trucking carrier J.B. Hunt JBHT beat the estimates for earnings by 11 cents per share and for revenues by $261 million (read: Stocks' Best Month Since 2020: Top ETF Areas of July).

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 49 securities. The in-focus six firms make up for a combined 47.9% share. From a sector perspective, railroads, and air freight & logistics take the largest share at 31.6% each, while trucking and airlines round off the next two spots with a double-digit exposure each.

iShares U.S. Transportation ETF has accumulated $896.6 million in its asset base and sees a solid trading volume of around 199,000 shares a day. It charges 41 bps in annual fees.

SPDR S&P Transportation ETF (XTN)

SPDR S&P Transportation ETF tracks the S&P Transportation Select Industry Index, holding 49 stocks in its basket. The in-focus firms account for around 2% share each. About 37% of the portfolio is dominated by trucking, while airlines, and air freight & logistics take 28.3% and 20.3% share, respectively (read: 5 Top-Ranked ETFs That Outperformed in July).

With AUM of $515.9 million, SPDR S&P Transportation ETF charges 35 bps in fees per year from its investors and trades in a volume of around 53,000 shares a day.

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 23.5% share. Trucking, railroads, auto parts and automobiles are the top sectors accounting for a double-digit exposure each.

First Trust Nasdaq Transportation ETF has amassed $91.4 million in its asset base and charges 60 bps in annual fees. The average trading volume is good at 56,000 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