4 Best ETF Charts of This Earnings Season

The fourth-quarter reporting cycle has effectively come to an end, with the growth pace showing notable acceleration and companies comfortably beating consensus estimates. Earnings of more than 90% of the S&P 500 index market capitalization that has reported so far are up 13.6% on 5.5% revenue growth, with 77.6% beating EPS estimates and 66.7% coming ahead of top-line expectations.  

The earnings and revenue growth pace for these companies represents a significant improvement over the recent periods. With respect to the fourth-quarter beat percentages, the EPS and revenue beat percentages are tracking above the preceding period but are otherwise tracking below the historical averages for this group of companies.  

Given this, most equity ETFs have impressed with their performance and generated handsome returns over the earnings season period (from Jan. 20 to date). Below are four ETFs from different sectors that have gained from strong earnings despite the market volatility. We have provided a chart for their performances over the past month and compared them with the broader market fund SPY and the broader sector.

ProShares Online Retail ETF (ONLN)

ProShares Online Retail ETF offers exposure to companies deemed to be "Online Retailers." It tracks the ProShares Online Retail Index, holding 19 stocks in its basket. The ETF has gained 3% since Jan. 20. Total earnings of 95.3% of the retail sector’s market capitalization are up 32.3% from the same period last year on 7.0% higher revenues, with 72.0% beating EPS estimates and 72.0% beating revenue estimates. Most of the growth was driven by Amazon AMZN. 

Amazon accounts for 22.2% in ONLN portfolio. Alibaba BABA, which makes up 6.7% in the ETF portfolio, also drove ONLN higher (read: Alibaba Jumps Post Q3 Earnings: ETFs to Buy). 
 

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Financial Select Sector SPDR Fund (XLF) 

Financial Select Sector SPDR Fund ETF, which seeks to provide broad exposure to the financial sector, added 1.2% during the earnings season. 

Earnings of the financial sector are up 23.3% from the same period last year on 7.8% higher revenues, with 78.4% of the companies topping EPS estimates and 67% exceeding revenue estimates. Leasing companies came up with a 100% earnings beat, followed by a beat of 94% for investment banks, 93% for Midwest banks, 93% for consumer loan companies and 90% for major regional banks (read: Why Bank ETFs Are Outperforming the Market).
 

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Global X Cybersecurity ETF (BUG)

This ETF offers exposure to the companies that stand to benefit from the increased adoption of cybersecurity technology. Total fourth-quarter earnings of 76.9% of the technology sector are up 21.7% from the same period last year on 9.3% higher revenues, with 84.6% of the companies beating on EPS and 81.5% surpassing revenue estimates. The combined beat is 72.3% — the third highest this earnings season (read: Cybersecurity ETF Hits New 52-Week High). 

As such, BUG from the cybersecurity corner emerged as the biggest winner, gaining 5.2% during the earnings period. The fund also got a boost from the recent surge in the adoption of AI technology, which has raised the need for cybersecurity.
 

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Roundhill Video Games ETF (NERD) 

Roundhill Video Games ETF offers exposure to companies engaged in video game publishing and/or video game development. It falls in the consumer discretionary sector, which is the second largest contributor to the S&P 500’s earnings growth. Total fourth-quarter earnings of the sector are up 18.4% year over year on 2.8% higher revenues.

Roundhill Video Games ETF has soared 10% since Jan. 20. The gaming industry came up with a 60% earnings beat and 38.2% earnings growth (read: 5 Best-Performing Sector ETFs Halfway Through Q1).
 

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This article originally published on Zacks Investment Research (zacks.com).

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