After the closing bell on Sep 20, transport bellwether FedEx (FDX – Free Report) delivered mixed first-quarter fiscal 2024 results. The courier company topped earnings estimates but missed on revenues. It provided upbeat guidance for the fiscal year despite the ongoing demand weakness.
Following the results, FDX shares jumped 5.8% in after-market trade. The smooth trading is also expected to be felt in the ETF world, especially with respect to the ones with the highest allocation to FedEx. These include Qraft AI-Enhanced U.S. Next Value ETF (NVQ – Free Report) , ProShares Supply Chain Logistics ETF (SUPL – Free Report) , Pacer Industrials and Logistics ETF (SHPP – Free Report) , iShares U.S. Transportation ETF (IYT – Free Report) and First Trust Nasdaq Transportation ETF (FTXR – Free Report) .
Earnings per share came in at $4.55, beating the Zacks Consensus Estimate of $3.70 and improving from $3.44 reported a year ago. Revenues fell 9% year over year to $21.7 billion and were shy of the estimated $21.8 billion. This marks the fourth quarterly drop in revenues (see: all the Industrials ETFs here).
For fiscal 2024, FedEx forecasts revenues to be flat year over year, compared with its prior projection of flat to low-single-digit percent revenue growth. It raised the lower end of its earnings per share guidance by 50 cents from its prior forecast to $17.00-$18.50.
The shipping giant is intensifying its cost-reduction initiatives in response to dwindling demand. As it begins merging its Express and Ground segments, FedEx anticipates savings of $4 billion over two years. While some integrations have occurred in specific U.S. markets, a complete merger will take place over several years.
ETFs in Focus
Let’s delve into each ETF below:
Qraft AI-Enhanced U.S. Next Value ETF is an actively-managed ETF that seeks capital appreciation by utilizing a value investing strategy enhanced by the use of artificial intelligence. It holds 100 stocks in its basket, with FedEx occupying the third position at 6.4%.
Qraft AI-Enhanced U.S. Next Value ETF has accumulated $4.7 million in its asset base and charges 75 bps in annual fees. It trades in average daily volume of 1,000 shares.
ProShares Supply Chain Logistics ETF is the first ETF focused exclusively on the companies poised to benefit from the transformation of how raw materials and goods move around the world. These logistics companies include leading global shipping, railroad, air and trucking companies that collectively touch every point of the supply chain. It follows the FactSet Supply Chain Logistics Index, charging investors 58 bps in annual fees.
ProShares Supply Chain Logistics ETF holds 40 stocks in its basket, with FedEx making up for the second spot with 5% of the assets. It has amassed $2 million in its asset base and trades in a volume of 100 shares per day. It charges 58 bps in fees per year from investors.
Pacer Industrials and Logistics ETF tracks the Pacer Global Supply Chain Infrastructure Index, which aims to offer investors exposure to globally listed stocks and depositary receipts involved in the support and functioning of global distribution supply chains. It holds 94 stocks in its basket, with FedEx accounting for the sixth position at 4.5% share (read: all the Industrials ETFs here).
Pacer Industrials and Logistics ETF has accumulated $1 million in its asset base. It trades in a meager volume of under 100 shares and charges 60 bps in annual fees.
iShares U.S. Transportation ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 44 securities. Of these, FedEx takes the sixth spot and makes up for 4.4% of the assets. Within the transportation sector, air freight and logistics, and railroad transportation take the top two spots with 26.9% and 26.6% share, respectively, while cargo ground transportation (15.9%) and passenger ground transportation (14.5%) round off the next two.
iShares U.S. Transportation ETF has $1 billion in AUM while seeing a good trading volume of around 143,000 shares a day. The fund charges 40 bps in fees per year and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
First Trust Nasdaq Transportation ETF offers exposure to the 41 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. FedEx occupies the ninth position in the basket with a 3.9% share. Automobiles, railroads, delivery services, and airlines make up for double-digit allocation each (read: UAW Strike: How Tesla and EV ETFs Stand to Gain).
First Trust Nasdaq Transportation ETF has amassed $44.4 million in its asset base and charges 60 bps in annual fees. The average trading volume is light at 13,000 shares. FTXR has a Zacks ETF Rank #2.
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