The Q3 reporting cycle has effectively come to an end. Earnings of 94.8% of the S&P 500 market capitalization that has been reported so far is down 8.1% on 1.2% lower revenues, with 84.6% beating EPS estimates and 75.9% beating revenue estimates. This is notably a better performance when compared with the same group of companies in the first half of the year. Additionally, the EPS and revenue beat percentages are tracking significantly higher than the other comparable periods.
Given this, several equity ETFs have impressed with their performances and generated handsome returns over the trailing one-month period. While there are winners in many corners of the space, below are five ETFs that buoyed up on strong earnings results. In addition, we have given a chart for their one-month performance and compared them with the broad market fund SPY and the broad sector.
Invesco WilderHill Clean Energy ETF PBW
This fund provides exposure to U.S. companies engaged in the business of advancement of cleaner energy and conservation. It has gained 40.4% in a month on strong Q3 earnings coupled with the potential of Joe Biden winning the White House. In particular, upbeat earnings from NIO Inc. NIO , Enphase Energy ENPH ,and SunPower Corp. SPWR led to a strong rally in the ETF (read: ETFs to Bet on Biden’s Potential Presidential Victory ).
First Trust NASDAQ Global Auto ETF CARZ
This fund offers a pure-play global exposure to auto stocks. It has gained 21% in the past month on strong Q3 earnings. Total earnings for 100% of the sector’s market capitalization that have been reported so far are up 45.8% on 2.2% lower revenues. Earnings and revenue beat ratios are of 100% and 71.4%, respectively. Both the earnings growth rate and beat ratio have been the strongest this reporting cycle. CARZ has a Zacks ETF Rank #3 (Hold) with High risk outlook (read: 3 Sector ETFs to Shine Despite Soft October Retail Sales ).
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SPDR S&P Aerospace & Defense ETF XAR
XAR offers equal-weight exposure to the aerospace & defense segment. Though the sector has witnessed negative earnings growth of 34.8%, its earnings beat ratio is 100%. The fund has risen 20.5% and has a Zacks ETF Rank #3 with a Medium risk outlook.
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Invesco Dynamic Semiconductors ETF PSI
This fund offers exposure to the companies principally engaged in the manufacture of semiconductors. It has surged 17.9% in a month buoyed by a spate of better-than-expected earnings. The product has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: Q3 Solid Earnings Push Semiconductor ETFs to New Highs ).
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SPDR S&P Retail ETF XRT
This product targets the retail sector and has gained 12.6% in a month. Total earnings from 94.1% of the sector’s total market capitalization reported so far are up 20.4% on 11.4% higher revenues with 92.6% of the companies beating on earnings and an equal proportion exceeding top-line estimates. The growth pace, and revenue and earnings surprises are well above the four-quarter average. XRT has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 4 Sector ETFs & Stocks to Buy on Forecast-Beating Jobs Data ).
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