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Bevy of Industrial Earnings Puts These ETFs in Focus

Sanghamitra Saha
Updated

The earnings season is in full swing now, taking our focus to the earnings performance of some industrial behemoths. The sector is in a tight spot right now, thanks to trade tensions between the United States and China and rising rate concerns.

Below we highlight the earnings reports from General Electric GE, 3M Company MMM, Honeywell HON and Union Pacific UNP to understand where the sector is headed this season.

General Electric

General Electric reported better-than-expected results in Q2, delivering a positive earnings surprise of 5.6%. However, the bottom line reflected a 10% decline from the year-ago tally of 21 cents.

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The consolidated revenues totaled $30,104 million, up 3% year over year. The improvement came on the back of higher Industrial revenues, partially offset by the underperformance of GE Capital. Also, the top line surpassed the Zacks Consensus Estimate of $29,823 million by 0.9%. The company reiterated its guidance for 2018.

3M Company

3M Company reported mixed results on Jul 24 for second-quarter 2018, with earnings meeting estimates and revenues surpassing the same by 0.9%. Adjusted earnings in the reported quarter were $2.59 per share. Also, proforma earnings increased 15.1% from the year-ago tally of $2.25.

3M Company’s net sales were $8,390 million, reflecting growth of 7.4% from the year-ago quarter. The top line exceeded the Zacks Consensus Estimate of $8,317 million.

The company has revised down its adjusted earnings guidance for 2018 from $10.20-$10.55 to $10.20-$10.45 per share. The revision shows the impact of income from the divestiture of communication markets’ businesses.

Honeywell

Honeywell’s earnings of $2.12 per share beat the Zacks Consensus Estimate of $2.01. This compares to earnings of $1.80 per share a year ago. Its revenues of $10.92 billion surpassed the Zacks Consensus Estimate by 1.33%. This compares to year-ago revenues of $10.08 billion.

Union Pacific

Union Pacific’sQ2 earnings of $1.98 per share surpassed the Zacks Consensus Estimate by 4 cents. The bottom line expanded 36.6% on a year-over-year basis. Operating revenues came in at $5,672 million, which outpaced the Zacks Consensus Estimate of $5,603.6 million. The figure also increased 8% year over year. Higher freight revenues (up 8%) boosted the top line.

Industrial ETFs in Focus

In the current scenario, it would be prudent to discuss the latest performance of the industrials ETFs that have a relatively high exposure to the companies discussed(see all Industrial ETFs here).

Industrial Select Sector SPDR Fund XLI

This fund focuses on providing exposure to the U.S. industrial sector. It has a 5.2% allocation to 3M Co, 5.1% to Honeywell, 4.96% to General Electric and 4.94% to Union Pacific. The fund has returned 2.0% in the past five days (as of Jul 26, 2018), the timeframe thick with earnings releases.

Vanguard Industrials ETF VIS

This ETF is a pure play on the U.S. industrials sector. It has a 4.1% allocation to General Electric, 4.0% to 3M, 3.8% to Union Pacific and 3.7% to Honeywell. The fund has gained 1.6% in the past five days.

iShares U.S. Industrials ETF IYJ

This ETF is a relatively costly bet on the U.S. industrial sector. It has a 3.5% allocation to 3M Co, 3.4% to Honeywell, 3.3% to General Electric and 3.2% to Union Pacific. The fund advanced 1.6% in the past five days.

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Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
3M Company (MMM) : Free Stock Analysis Report
 
Honeywell International Inc. (HON) : Free Stock Analysis Report
 
General Electric Company (GE) : Free Stock Analysis Report
 
VIPERS-INDUS (VIS): ETF Research Reports
 
SPDR-INDU SELS (XLI): ETF Research Reports
 
ISHARS-US INDU (IYJ): ETF Research Reports
 
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