ETFs
A Look at Retail ETFs After Q1 Results – May 28, 2024
The overall profit picture for the retail sector in the first quarter was modest. Total winnings of 95.4% of total industry market cap reported thus far are up 31.9% on revenues up 5.6%, with 69.2% beating EPS estimates and 57.7% beating EPS estimates. income. However, this is a notable slowdown from the growth trend of recent quarters, especially when excluding Amazon’s (AMZN) numbers from the growth rate results. Beat ratios are also significantly lower than the 20-quarter average.
Most major retailers reported higher profits or revenues, or both. The results had a mixed impact on retail ETFs. SPDR S&P Retail ETF (XRT – Free report) , Amplify Online Retail ETF (I BUY – Free report) And ProShares Online Retail ETF (ONLN – Free report) gained 2.6%, 0.8% and 5.6% respectively over the past month, while VanEck Vectors Retail ETF (RTH – Free report) loses 0.7% (see: all consumer discretionary ETFs here).
Let’s look at the details of some earnings releases.
Focus on profits
Walmart (WMT – Free report) reported strong results for the first quarter of fiscal 2025, in which it beat both profit and revenue estimates. Earnings per share came in at 60 cents, beating the Zacks Consensus Estimate of 52 cents and improving from year-ago earnings of 49 cents. Revenue rose 6% year over year to $161.5 billion and surpassed the consensus mark of $159.50 billion. The megaretailer offered upbeat forecasts for the fiscal year, spreading enormous optimism and signaling a resilient consumer environment. It now expects revenue growth to be at the high end of or slightly above its previous forecast of 3% to 4% and earnings per share to be at the high end of or slightly above the initial forecast of $6.70 to $7.12 (read: Walmart Hits New Highs on Strong Q1 Profits: ETFs to Buy).
Home deposit (HD – Free report), the world’s largest retailer of home improvement products, reported better-than-expected profits but revenue that lagged estimates. Earnings per share beat the Zacks Consensus Estimate by a few cents, but revenue missed the same amount by $236 million. The retailer reaffirmed its outlook for fiscal 2024. Home Depot expects its sales to increase 1% year over year, including $2.3 billion in sales contribution from the 53rd week. He estimates earnings per share will increase 1% year over year. It expects the 53rd week to contribute 30 cents per share to fiscal 2024 earnings.
Meanwhile, the second largest home improvement retailer, Lowe’s (WEAK – Free report) beat estimates for earnings by 12 cents and revenue of $290 million. He reiterated his vision for fiscal 2024. The company still expects total sales to be between $84 billion and $85 billion. The company expects earnings per share in the range of $12.00 to $12.30.
Big box retailer Target (TGT – Free report) missed the Zacks Consensus Estimate for earnings by a few cents and beat revenue estimates by $14 million. The retailer expects its comparable sales to remain flat, or up 2%, in the second quarter of fiscal 2024. It expects adjusted earnings per share of between $1.95 and $2.35, up from 1 $.80 reported for the prior year period.
Focus on ETFs
Below we have presented the ETFs in detail:
SPDR S&P Retail ETF (XRT – Free report)
The SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure to large-, mid-, and small-cap stocks. He holds 79 well-diversified stocks in his basket, none of which represents more than 2% of the shares. The SPDR S&P Retail ETF is well distributed across various sectors with a double-digit allocation in each of the Apparel Retail, Auto Retail, Specialty Store, and Mass Retail sectors. ladder.
The SPDR S&P Retail ETF is the largest and most popular in the retail industry, with $350.5 million in assets under management and an average trading volume of 7 million shares. It charges 35 basis points in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium Risk Outlook (read: Inflation Cools in April: 5 Sector ETFs and Stocks to Thrive).
Amplify Online Retail ETF (I BUY – Free report)
The Amplify Online Retail ETF provides global exposure to publicly traded companies with significant revenue generation from online retail, traditional online retail, online travel, online marketplace and home sales. omnichannel retail by tracking the EQM Online Retail Index. IBUY holds 79 stocks in its basket, none of which represents more than 3.4% of assets. The Amplify Online Retail ETF has the largest allocation, with 41% in online retail and 31% in online marketplace.
The Amplify Online Retail ETF has attracted $170.2 million into its asset base and charges 65 basis points in annual fees. IBUY trades an average daily volume of 10,000 shares.
ProShares Online Retail ETF (ONLN – Free report)
The ProShares Online Retail ETF provides exposure to companies that sell primarily online or through other non-store channels, then focuses on companies that are reshaping the retail space. It tracks the ProShares Online Retail Index, holding 18 stocks in its basket. ONLN is heavily concentrated on the three largest companies, while other companies hold no more than 5.4% of assets. US companies represent 73% of the portfolio, while Irish companies represent 12.2%.
The ProShares Online Retail ETF has accumulated $98.6 million in its asset base and charges 58 basis points in annual fees. ONLN trades an average daily volume of 20,000 shares.
VanEck Vectors Retail ETF (RTH – Free report)
The VanEck Vectors Retail ETF provides exposure to the 26 largest retail companies by tracking the MVIS US Listed Retail 25 Index, which measures the performance of companies involved in retail distribution, wholesalers, online retailers, direct mail and television, multi-line retailers, specialty retailers. food and other commodity retailers and retailers. The VanEck Vectors Retail ETF is heavily focused on the top company with double-digit exposure, while other companies only hold a 9.5% share (read: Buy 5 Top-Ranked ETFs to Navigate the Current Bull Market).
VanEck Vectors Retail ETF has amassed $202.4 million in its asset base and charges 35 basis points in annual fees. It trades in a lower volume of 5,000 shares per day on average. The VanEck Vectors Retail ETF has a Zacks ETF Rank #2 (Buy) with a Medium Risk Outlook.
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