The Q2 earnings season remains robust and continues to improve, with an above-average share of companies topping estimates and outlooks strengthening for both the current and upcoming periods. Among the 457 S&P 500 companies that have reported so far, total earnings are up 11.6% year over year on 5.8% higher revenues, with 80.5% beating EPS forecasts and 78.8% surpassing revenue expectations.
The proportion of the 457 index members beating EPS and revenue estimates is tracking notably above the historical average for this group of companies. The Q2 EPS beat percentage of 80.5% compares with the 20-quarter average of 77.6%, while the comparison on the revenues side is 78.8% versus 70.4%.
Given this, most equity ETFs have impressed with their performance and generated handsome returns over the past month. Below are five ETFs from different sectors that buoyed up on strong earnings despite the market volatility.
Amplify Video Game Leaders ETF (GAMR)
Amplify Video Game Leaders ETF offers exposure to global companies in the video gaming value chain, including game development, publishing, mobile and online games, GPUs, development platforms, supporting software, hardware, peripherals and the metaverse. It falls in the consumer discretionary sector, which is the largest contributor to the S&P 500’s earnings growth. Total second-quarter earnings of the sector are up 142% year over year on 3.3% higher revenues. Amplify Video Game Leaders ETF soared 12.7% in a month. The gaming industry came up with a 61% earnings beat.
Alger AI Enablers & Adopters ETF (ALAI)
Alger AI Enablers & Adopters ETF invests in equity securities of companies focusing on the development, adoption, or utilization of artificial intelligence (AI) technologies identified through fundamental research as demonstrating promising growth potential. Total second-quarter earnings of 69.8% of the technology sector are up 18.3% from the same period last year on 12.1% higher revenues, with 83.1% of the companies beating EPS estimates and 95.4% surpassing revenue estimates. Notably, the technology sector is the second-highest contributor to revenue growth.
ALAI emerged as the biggest winner, gaining 12.2% in a month driven by the AI boom and Magnificent Seven earnings. NVIDIA (NVDA), Amazon.com (AMZN) and Microsoft (MSFT) are the top three holdings with double-digit exposure each (read: Meta, Microsoft Spark $500B Rally in AI Leaders and ETFs).
ARK Space Exploration & Innovation ETF (ARKX)
ARK Space Exploration & Innovation ETF is an actively managed ETF that seeks to invest in domestic and foreign equity securities of companies that are engaged in the theme of space exploration and innovation. Earnings of the aerospace sector are up 26.6% from the same period last year on 11.7% higher revenues, with 92.3% of the companies topping EPS estimates and 84.6% exceeding revenue estimates. ARKX is up about 8% in a month (read: Strong Start to Q2 Earnings Season: 4 Sector ETFs to Play)
Invesco Dorsey Wright Financial Momentum ETF (PFI)
Invesco Dorsey Wright Financial Momentum ETF is designed to identify companies that are showing relative strength. It has gained 2.3% in a month. Earnings of the financial sector are up 14% from the same period last year on 3.9% higher revenues, with 82.6% of the companies topping EPS estimates and 75% exceeding revenue estimates. Leasing companies came up with a 100% earnings beat, followed by a beat of 92.1% for property and casualty, 90% for major regional banks, 88.2% for Southeast banks and 85% for investment banks.
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 12% in a month. Total earnings of 68.6% of the retail sector’s market capitalization are up 20.6% from the same period last year on 8.7% higher revenues, with 80% beating both EPS and revenue estimates. Most of the growth was driven by Amazon (AMZN), which accounts for 22% in the ONLN portfolio (read: Amazon Q2 Earnings Beat Estimates, Shares Dip: ETFs in Focus).
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Amplify Video Game Leaders ETF (GAMR): ETF Research Reports
Invesco Dorsey Wright Financial Momentum ETF (PFI): ETF Research Reports
ProShares Online Retail ETF (ONLN): ETF Research Reports
ARK Space Exploration & Innovation ETF (ARKX): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
