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3 ETFs For This Week's Earnings Reports

Benzinga Real-time News ·  Aug 3, 2020 21:12

Second-quarter earnings seasons rolls along this week and here's to hoping there are some pleasant surprises, which, believe it or not, there have been plenty of. Of course, the second-quarter bar is set remarkably low because of the coronavirus pandemic, but upside surprises are rarely a bad thing.

Currently, 84% of S&P 500 members reporting results are beating estimates, above the five-year average.

“If 84% is the final percentage for the quarter, it will mark the highest percentage of S&P 500 companies reporting a positive EPS surprise since FactSet began tracking this metric in 2008,” notes John Butters of FactSet Research.

With that in mind, here are some exchange-traded funds to consider for this week's earnings onslaught.

Communication Services Select Sector SPDR (XLC)

The Communication Services Select Sector SPDR (NYSE:XLC) gained 2.25% last week, dealing with reports from Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOG) with aplomb.

This week's marquee report among XLC components is Dow component Walt Disney Co (NYSE:DIS) on Tuesday after the bell. However, several video game makers and media companies report this week, too, sending a decent percentage of XLC's roster into the earnings confessional.

To this point in earnings season, 75% of communication services companies reporting are beating estimates. Only energy and real estate have lower percentages.

Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD)

Speaking of video games, the Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSE:NERD) jumped 4.78% last week with some help from a bullish earnings report from Electronic Arts (NASDAQ:EA). That extends NERD's 2020 gain to a stellar 46%.

More potential earnings catalysts loom for NERD this week with Take-Two Interactive (NASDAQ:TTWO) and Activision Blizzard (NASDAQ:ATVI) reporting on Monday and Tuesday, respectively. Those stocks combine for 10% of NERD's roster.

EA's report confirms more games are being sold amid the pandemic. NERD could repeat last week's bullishness if Take-Two and Activision make similar comments.

iShares U.S. Healthcare Providers ETF (IHF)

The iShares U.S. Healthcare Providers ETF (NYSE:IHF) is up just 2% this year despite health insurers keeping costs down as patients eschew elective procedures due to the pandemic.

CVS Health (NYSE:CVS), IHF's second-largest holding at a weight of 12.5%, reports this week.

“CVS reported above our expectations in the first quarter after an increase in store activity as a result of the shelter-in-place orders,” according to Morningstar. “As a top-tier pharmacy and health insurer with pharmacy benefit manager franchises, the narrow-moat company is a leader in affordable healthcare. Despite concerns and impact from the coronavirus, we believe CVS’ 2020 will not be severely disrupted by the pandemic.”

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