The energy sector has been lagging this year due to a decline in oil prices. The two energy behemoths — Exxon Mobil Corp. XOM and Chevron Corp. CVX — reported weak profitability. The companies recorded nearly $14 billion combined in profits, down from last year’s record-breaking level. Exxon Mobil reported a 56% slump in second-quarter profit while Chevron’s profit fell 48%.
Amid the decline in profitability, both companies reported mixed results. Exxon Mobil lagged earnings estimates while topping on revenues. Chevron beat on the bottom line but missed top-line estimates. This has put focus on energy ETFs like Energy Select Sector SPDR XLE, Vanguard Energy ETF VDE, iShares U.S. Energy ETF IYE, Fidelity MSCI Energy Index ETF FENY and Strive U.S. Energy ETF DRLL with the largest allocation to the energy behemoths.
Earnings in Focus
The largest U.S. oil producer Exxon Mobil posted earnings per share of $1.94, missing the Zacks Consensus Estimate of $2.00 and less than the year-ago earnings of $4.14. Revenues dropped 28% year over year to $82.9 billion but edged past the estimated figure of $78.85 billion (read: Here’s Why Oil ETFs Likely to Gain in the Near Term).
Earnings per share at Chevron came in at $3.08, beating the Zacks Consensus Estimate of $2.95. However, the figure declined from the year-ago earnings of $5.82 per share. Revenues declined 28.9% year over year to $48.9 billion and fell short of the consensus mark of $51.4 billion.
ETFs in Focus
Energy Select Sector SPDR (XLE)
Energy Select Sector SPDR is the largest and the most popular ETF in the energy space, with AUM of $35.8 billion and an average daily volume of 19 million shares per day. It offers exposure to the broad energy space and follows the Energy Select Sector Index. Energy Select Sector SPDR holds 23 securities in its basket, with Exxon Mobil and Chevron occupying the top two spots with 21% and a 18.6% share, respectively.
Energy Select Sector SPDR charges 10 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
Vanguard Energy ETF (VDE)
Vanguard Energy ETF provides exposure to a basket of 113 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. Here again, Exxon and Chevron are the two leading firms with a 21.8% and 15.2% allocation, respectively.
Vanguard Energy ETF has amassed $8.1 billion in its asset base. It sees a good volume of about 548,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook.
iShares U.S. Energy ETF (IYE)
iShares U.S. Energy ETF tracks the Russell 1000 Energy RIC 22.5/45 Capped Gross Index (USD), giving investors exposure to U.S. companies that produce and distribute oil and gas. It holds 41 stocks in its basket, with Exxon Mobil and Chevron taking the top two positions at 20.9% and 14.4% share, respectively (see: all the Energy ETFs here).
iShares U.S. Energy ETF charges 39 bps in fees per year from its investors. It has AUM of $1.3 billion and an average daily volume of about 484,000 shares. The product has a Zacks ETF Rank #3 with a High risk outlook.
Fidelity MSCI Energy Index ETF (FENY)
Fidelity MSCI Energy Index ETF fund follows the MSCI USA IMI Energy Index, holding 122 stocks in its basket. Of these, XOM and CVX take the top two spots at 22% and 15.3%, respectively.
Fidelity MSCI Energy Index ETF charges 8 bps in annual fees and trades in a good volume of around 798,000 shares. It has accumulated $1.6 billion in its asset base and has a Zacks ETF Rank #3 with a High risk outlook.
Strive U.S. Energy ETF (DRLL)
Strive U.S. Energy ETF seeks broad market exposure to the U.S. energy sector and follows the Solactive United States Energy Regulated Capped Index. It holds 64 stocks in its basket, with Exxon Mobil and Chevron taking the top two positions at 20.6% and 14.9% share, respectively.
Strive U.S. Energy ETF has gathered $354.3 million in its asset base since its inception last August. It charges 41 bps in fees per year from investors and trades in an average daily volume of 44,000 shares.
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Chevron Corporation (CVX) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Energy Select Sector SPDR ETF (XLE): ETF Research Reports
iShares U.S. Energy ETF (IYE): ETF Research Reports
Vanguard Energy ETF (VDE): ETF Research Reports
Fidelity MSCI Energy Index ETF (FENY): ETF Research Reports
Strive U.S. Energy ETF (DRLL): ETF Research Reports
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