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The third-quarter 2024 earnings season will kick off this week, with banking sector players due to report numbers. The overall picture ahead of this reporting cycle is one of continued resilience and a steadily improving outlook.
Total S&P 500 earnings are expected to be up 3.7% from the year-ago period on 5.1% higher revenues, per the latest Earnings Trends report. Estimates have steadily come down from 6.9% growth since the start of the period to 3.7% growth, with the magnitude of estimate cuts significantly bigger than the comparable recent quarters.
Of the 16 Zacks sectors, nine are expected to post earnings growth in the third quarter, with the strongest gains in the Aerospace sector (30%), followed by Technology sector (12.4%), Medical (7.9%), Business Services (7.3%), Consumer Discretionary (5.8%), Retail (4.1%) and Finance (2.3%).
For the Technology sector, the third quarter is expected to be the fifth consecutive quarter of double-digit earnings growth. In particular, earnings of the “Magnificent 7” companies are expected to be up 17.2% from the same period last year on 13.6% higher revenues (read: 5 Tech ETFs at the Forefront of the Fed-Induced Rally).
Stay up-to-date with all quarterly releases:See Zacks Earnings Calendar.
We have highlighted an ETF each from the abovementioned sectors that could make great plays as the earnings season unfolds.
iShares U.S. Aerospace & Defense ETF provides exposure to U.S. companies that manufacture commercial and military aircraft and other defense equipment by tracking the Dow Jones U.S. Select Aerospace & Defense Index. It holds 35 stocks in its basket with AUM of $6.2 billion and an expense ratio of 0.40%.
iShares U.S. Aerospace & Defense ETF trades in an average daily volume of around 421,000 shares. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $769.8 million in its asset base and charges 29 bps in fees per year. MAGS trades in an average daily volume of 641,000 shares (read: Best Sector ETFs of the First Nine Months).
Healthcare: Health Care Select Sector SPDR Fund (XLV - Free Report) )
Health Care Select Sector SPDR Fund is the most popular healthcare ETF with an AUM of $41.4 billion and an average daily volume of 7 million shares. It follows the Health Care Select Sector Index and holds 62 securities in its basket. Pharma takes the largest share at 31.4% from a sector look, while healthcare providers and services, healthcare equipment and supplies, biotech, and life sciences tools & services have double-digit exposure each.
Health Care Select Sector SPDR Fund charges 9 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
iShares U.S. Consumer Discretionary ETF offers exposure to U.S. companies that distribute food, drugs, general retail items and media by tracking the Russell 1000 Consumer Disc 40 Act 15/22.5 Daily Capped Index. It holds 175 stocks in its basket, with key holdings in consumer discretionary, consumer services, media & entertainment, autos & components, and consumer staples distribution & retail.
iShares U.S. Consumer Discretionary ETF has amassed $1 billion in its asset base and trades in a moderate volume of 109,000 shares a day on average. It charges 39 bps in annual fees from investors. IYC has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF is highly concentrated on the top firm with double-digit exposure, while the other firms hold no more than a 8.4% share (read: 4 Sector ETFs to Buy for the Fourth Quarter of 2024).
VanEck Vectors Retail ETF has amassed $221 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 4,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
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5 Sector ETFs to Bet on This Earnings Season
The third-quarter 2024 earnings season will kick off this week, with banking sector players due to report numbers. The overall picture ahead of this reporting cycle is one of continued resilience and a steadily improving outlook.
Total S&P 500 earnings are expected to be up 3.7% from the year-ago period on 5.1% higher revenues, per the latest Earnings Trends report. Estimates have steadily come down from 6.9% growth since the start of the period to 3.7% growth, with the magnitude of estimate cuts significantly bigger than the comparable recent quarters.
Of the 16 Zacks sectors, nine are expected to post earnings growth in the third quarter, with the strongest gains in the Aerospace sector (30%), followed by Technology sector (12.4%), Medical (7.9%), Business Services (7.3%), Consumer Discretionary (5.8%), Retail (4.1%) and Finance (2.3%).
For the Technology sector, the third quarter is expected to be the fifth consecutive quarter of double-digit earnings growth. In particular, earnings of the “Magnificent 7” companies are expected to be up 17.2% from the same period last year on 13.6% higher revenues (read: 5 Tech ETFs at the Forefront of the Fed-Induced Rally).
Stay up-to-date with all quarterly releases:See Zacks Earnings Calendar.
We have highlighted an ETF each from the abovementioned sectors that could make great plays as the earnings season unfolds.
Aerospace: iShares U.S. Aerospace & Defense ETF (ITA - Free Report) )
iShares U.S. Aerospace & Defense ETF provides exposure to U.S. companies that manufacture commercial and military aircraft and other defense equipment by tracking the Dow Jones U.S. Select Aerospace & Defense Index. It holds 35 stocks in its basket with AUM of $6.2 billion and an expense ratio of 0.40%.
iShares U.S. Aerospace & Defense ETF trades in an average daily volume of around 421,000 shares. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Technology: Roundhill Magnificent Seven ETF (MAGS - Free Report) )
Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $769.8 million in its asset base and charges 29 bps in fees per year. MAGS trades in an average daily volume of 641,000 shares (read: Best Sector ETFs of the First Nine Months).
Healthcare: Health Care Select Sector SPDR Fund (XLV - Free Report) )
Health Care Select Sector SPDR Fund is the most popular healthcare ETF with an AUM of $41.4 billion and an average daily volume of 7 million shares. It follows the Health Care Select Sector Index and holds 62 securities in its basket. Pharma takes the largest share at 31.4% from a sector look, while healthcare providers and services, healthcare equipment and supplies, biotech, and life sciences tools & services have double-digit exposure each.
Health Care Select Sector SPDR Fund charges 9 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Consumer Discretionary: iShares U.S. Consumer Services ETF (IYC - Free Report)
iShares U.S. Consumer Discretionary ETF offers exposure to U.S. companies that distribute food, drugs, general retail items and media by tracking the Russell 1000 Consumer Disc 40 Act 15/22.5 Daily Capped Index. It holds 175 stocks in its basket, with key holdings in consumer discretionary, consumer services, media & entertainment, autos & components, and consumer staples distribution & retail.
iShares U.S. Consumer Discretionary ETF has amassed $1 billion in its asset base and trades in a moderate volume of 109,000 shares a day on average. It charges 39 bps in annual fees from investors. IYC has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Retail: VanEck Vectors Retail ETF (RTH - Free Report)
VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF is highly concentrated on the top firm with double-digit exposure, while the other firms hold no more than a 8.4% share (read: 4 Sector ETFs to Buy for the Fourth Quarter of 2024).
VanEck Vectors Retail ETF has amassed $221 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 4,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.