FedEx Earnings Put Transport ETFs In Focus

After the closing bell on Mar 17, transport bellwether FedEx (NYSE:FDX) reported mixed third-quarter fiscal 2020 results. The courier company missed earnings estimates but beat on revenues. It also suspended its 2020 fiscal outlook due to the outbreak of the coronavirus (read: Do Low Volatility ETFs Outperform During Market Turmoil?).

Earnings per share came in at $1.41, missing the Zacks Consensus Estimate of $1.49 and declining from the year-ago earnings of $3.03. Revenues grew 2.9% year over year to $17.49 billion and edged past the estimated $17.01 billion.

The revenue beat has sent FDX shares jumping nearly 8% in aftermarket hours. FedEx has a Rank #4 (Sell) and an impressive VGM Score of B. It currently falls under a top-ranked Zacks industry (top 43%).

ETFs in Focus

The FedEx report has put transport ETFs — iShares Dow Jones Transportation Average Fund IYT, SPDR S&P Transportation (NYSE:XTN) ETF XTN and First Trust Nasdaq Transportation ETF FTXR — in focus. All these funds currently have a Zacks ETF Rank #4 (Sell) (see: all the Industrials ETFs here).

IYT

The ETF tracks the Dow Jones Transportation Average Index, giving investors exposure to a small basket of 20 securities. Of these, FedEx occupies the fourth position with 7.8% of the assets. Within the transportation sector, railroads, and air freight and logistics take the top two spots with 35.9% and 25.7% share, respectively, while trucking (17.8%) and airlines (14.5%) round off the next two. The fund has accumulated nearly $387.2 million in AUM while it sees a good trading volume of around 217,000 shares a day. It charges 42 bps in fees per year (read: Airline ETF & Stocks at Risk as Coronavirus Hits Air Travel).

XTN

This fund follows the S&P Transportation Select Industry Index and uses almost an equal-weight methodology for each security. Holding 43 stocks with AUM of $94.6 million, FedEx accounts for 2.3% share in the basket. The product is heavily exposed to trucking, which represents more than one-third of the portfolio while air freight & logistics and airlines take up 23.6% and 20.5% share, respectively. The fund charges 35 bps in fees per year from investors and trades in light volume of about 18,000 shares a day.

FTXR

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. FedEx holds 1.7% share in the basket. Here, airlines takes the largest share at 33.9%, followed by ground freight & logistics (28.3%), auto & truck manufacturers (15.1%) and auto, truck & motorcycle parts (14.6%). FTXR has amassed $1 million in its asset base and charges 60 bps in annual fees. Average trading volume is meager at 1,000 shares.

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FedEx Corporation (FDX): Free Stock Analysis Report

iShares Transportation Average 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