The transportation sector has been performing remarkably well over the past few weeks on a resilient economy backed by solid consumer spending and lower unemployment. iShares U.S. Transportation ETF IYT, SPDR S&P Transportation ETF XTN and First Trust Nasdaq Transportation ETF FTXR have risen 3.5%, 1.4% and 1%, respectively, over the past month.

The second-quarter earnings picture for the transportation sector has also been solid. This is especially true as the sector is the third-largest contributor to earnings growth so far. Earnings for 72.4% of the market capitalization of the sector are up 17.4% on 1.3% revenue growth. However, the earnings and revenue beat ratios of 66.7% and 50%, respectively, are not so impressive.

For a better understanding, let’s delve into the results of some well-known industry players:

Transportation Earnings in Brief

The world’s largest package delivery company United Parcel Service UPS surpassed the Zacks Consensus Estimate for earnings but lagged the same for revenues. Earnings of $2.54 per share were 3 cents ahead of the consensus mark but revenues of $22 billion came in below the estimated $22.88 billion (see: all the Industrials ETFs here).

Major railroads Union Pacific UNP and Norfolk Southern Corp NSC missed estimates on both fronts. UNP missed earnings estimates by 18 cents and revenue estimates by $158 million. Meanwhile, Norfolk lagged earnings and revenue estimates by 20 cents and $92 million, respectively.

U.S. airlines Delta Air Lines DAL and United Airlines UAL reported better-than-expected results. Delta reported earnings per share of $2.68, which outpaced the Zacks Consensus Estimate of $2.52. Revenues of $15.58 billion also edged past the consensus mark of $14.91 billion. United Airlines reported earnings of $5.03, which handily beat the Zacks Consensus Estimate of $3.99. Revenues of $14.18 billion came in above the estimated $13.93 billion.

Last but not least, leading trucking carrier J.B. Hunt JBHT missed estimates for earnings by 16 cents per share and for revenues by $215 million.

ETFs in Focus

iShares U.S. Transportation ETF (IYT)

iShares U.S. Transportation ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 46 securities. The six in-focus firms make up a combined 47.7% share. From a sector perspective, air freight & logistics, and rail transportation take the largest share at 28.3% and 25.2% share, respectively, while cargo ground transportation, passenger airlines and passenger ground transportation round off the next three spots with a double-digit exposure each.

iShares U.S. Transportation ETF has accumulated $1.2 billion in its asset base and sees a solid trading volume of around 172,000 shares a day. It charges 39 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

SPDR S&P Transportation ETF (XTN)

SPDR S&P Transportation ETF tracks the S&P Transportation Select Industry Index, holding 46 stocks in its basket. The in-focus firms account for around 2% share each. About 31% of the portfolio is dominated by cargo ground transportation, while passenger airlines, air freight & logistics round off the next two with double-digit exposure each.

With AUM of $258 million, SPDR S&P Transportation ETF charges 35 bps in fees per year from its investors and trades in a volume of around 30,000 shares a day. It has a Zacks ETF Rank #2 with a High risk outlook.

First Trust Nasdaq Transportation ETF (FTXR)

First Trust Nasdaq Transportation ETF offers exposure to the 38 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. The in-focus six firms represent a combined 29% share. Delivery services, automobiles, railroads, trucking, and commercial vehicle-equipment leasing are the top sectors, accounting for double-digit exposure each.

First Trust Nasdaq Transportation ETF has amassed $59.6 million in its asset base and charges 60 bps in annual fees. The average trading volume is good at 15,000 shares. FTXR has a Zacks ETF Rank #2.
Delta Air Lines, Inc. (DAL): Free Stock Analysis Report

United Airlines Holdings Inc (UAL): Free Stock Analysis Report

Union Pacific Corporation (UNP): Free Stock Analysis Report

Norfolk Southern Corporation (NSC): Free Stock Analysis Report

J.B. Hunt Transport Services, Inc. (JBHT): Free Stock Analysis Report

United Parcel Service, Inc. (UPS): Free Stock Analysis Report

iShares U.S. Transportation ETF (IYT): ETF Research Reports

SPDR S&P Transportation ETF (XTN): ETF Research Reports

First Trust NASDAQ Transportation ETF (FTXR): ETF Research Reports

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Zacks Investment Research

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