We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ETFs to Gain as Alphabet Rises Despite Q2 Earnings Miss
Read MoreHide Full Article
After the closing bell on Monday, Google parent Alphabet (GOOGL - Free Report) reported weak second-quarter 2022 results, missing both revenue and earnings estimates. However, the result was not as bad as was feared given the broader fallout in digital ads.
As such, shares of GOOGL rose as much as 5% in after-market trading on an elevated volume. This has put the focus on ETFs — Vanguard Communication Services ETF (VOX - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Communication Services Select Sector SPDR Fund (XLC - Free Report) , iShares Global Comm Services ETF (IXP - Free Report) and UPHOLDINGS Compound Kings ETF (KNGS - Free Report) — with a substantial allocation to Alphabet.
Earnings in Focus
Earnings per share came in at 1.21, missing the Zacks Consensus Estimate of $1.27 and declining from the year-ago quarter of $1.36. Revenues of $57.47 billion (including traffic acquisition costs (TAC) which the company does not calculate in its headline) lagged the consensus estimate of $57.51 billion. The company reported revenues of $69.7 billion, up 13% year over year. This marks the slowest pace of revenue growth in two years.
Advertising revenues grew 12% year over year to $56.3 billion. YouTube division was the major disappointment as sales rose just 5% after jumping 84% in the year-ago quarter (see: all the Communication ETFs here).
Vanguard Communication Services ETF targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 110 stocks in its basket, Alphabet takes the second spot with a 12.3% share. Interactive media & services is the top sector, accounting for 42% of the portfolio, while movies & entertainment, integrated telecommunication services, and cable & satellite round off the next three.
Vanguard Communication Services ETF has AUM of $2.7 billion and trades in a good volume of 301,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 115 stocks in its basket, with Alphabet occupying the second position at 12.3%. Interactive media & services takes the top spot at 42.3%, while media, entertainment, and diversified telecommunication services round off the next three positions.
Fidelity MSCI Communication Services Index ETF has amassed $555 million in its asset base and trades in an average daily volume of 153,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $9.6 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Alphabet occupying the second position at 11.7%. About 45% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two.
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 5.3 million shares. It has a Zacks ETF Rank #2 (read: 5 ETFs to Ride on the Strength in Netflix Q2 Earnings).
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 73 stocks in its basket, with Alphabet taking the top spot at 11.6% share. Interactive media & services dominates the fund’s return at 44.6%, followed by integrated telecommunication services (19.3%).
iShares Global Comm Services ETF has amassed $295.2 million in its asset base while trading at an average daily volume of 58,000 shares. The expense ratio comes in at 0.43%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
UPHOLDINGS Compound Kings ETF is actively managed and seeks long-term growth and income primarily by investing in compounders: companies with the potential to reinvest their own cash flow at above-average rates of return. It holds 25 stocks in its basket, with Alphabet taking the fifth spot with 7.8% of assets.
UPHOLDINGS Compound Kings ETF has accumulated $8.1 million in its asset base and charges 60 bps on an annual basis. It trades in a volume of 1,000 shares per day on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
ETFs to Gain as Alphabet Rises Despite Q2 Earnings Miss
After the closing bell on Monday, Google parent Alphabet (GOOGL - Free Report) reported weak second-quarter 2022 results, missing both revenue and earnings estimates. However, the result was not as bad as was feared given the broader fallout in digital ads.
As such, shares of GOOGL rose as much as 5% in after-market trading on an elevated volume. This has put the focus on ETFs — Vanguard Communication Services ETF (VOX - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Communication Services Select Sector SPDR Fund (XLC - Free Report) , iShares Global Comm Services ETF (IXP - Free Report) and UPHOLDINGS Compound Kings ETF (KNGS - Free Report) — with a substantial allocation to Alphabet.
Earnings in Focus
Earnings per share came in at 1.21, missing the Zacks Consensus Estimate of $1.27 and declining from the year-ago quarter of $1.36. Revenues of $57.47 billion (including traffic acquisition costs (TAC) which the company does not calculate in its headline) lagged the consensus estimate of $57.51 billion. The company reported revenues of $69.7 billion, up 13% year over year. This marks the slowest pace of revenue growth in two years.
Advertising revenues grew 12% year over year to $56.3 billion. YouTube division was the major disappointment as sales rose just 5% after jumping 84% in the year-ago quarter (see: all the Communication ETFs here).
ETFs in Focus
Vanguard Communication Services ETF (VOX - Free Report)
Vanguard Communication Services ETF targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 110 stocks in its basket, Alphabet takes the second spot with a 12.3% share. Interactive media & services is the top sector, accounting for 42% of the portfolio, while movies & entertainment, integrated telecommunication services, and cable & satellite round off the next three.
Vanguard Communication Services ETF has AUM of $2.7 billion and trades in a good volume of 301,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 115 stocks in its basket, with Alphabet occupying the second position at 12.3%. Interactive media & services takes the top spot at 42.3%, while media, entertainment, and diversified telecommunication services round off the next three positions.
Fidelity MSCI Communication Services Index ETF has amassed $555 million in its asset base and trades in an average daily volume of 153,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $9.6 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Alphabet occupying the second position at 11.7%. About 45% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two.
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 5.3 million shares. It has a Zacks ETF Rank #2 (read: 5 ETFs to Ride on the Strength in Netflix Q2 Earnings).
iShares Global Comm Services ETF (IXP - Free Report)
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 73 stocks in its basket, with Alphabet taking the top spot at 11.6% share. Interactive media & services dominates the fund’s return at 44.6%, followed by integrated telecommunication services (19.3%).
iShares Global Comm Services ETF has amassed $295.2 million in its asset base while trading at an average daily volume of 58,000 shares. The expense ratio comes in at 0.43%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
UPHOLDINGS Compound Kings ETF (KNGS - Free Report)
UPHOLDINGS Compound Kings ETF is actively managed and seeks long-term growth and income primarily by investing in compounders: companies with the potential to reinvest their own cash flow at above-average rates of return. It holds 25 stocks in its basket, with Alphabet taking the fifth spot with 7.8% of assets.
UPHOLDINGS Compound Kings ETF has accumulated $8.1 million in its asset base and charges 60 bps on an annual basis. It trades in a volume of 1,000 shares per day on average.