FAANG ETFs in Focus Ahead of Q3 Earnings

Sweta Killa
·5 min read

The FAANG stocks — Facebook FB, Amazon AMZN, Apple AAPL, Netflix NFLX and Alphabet GOOGL — are among the winners of the coronavirus pandemic. This is especially thanks to the global digital shift that has accelerated e-commerce for everything ranging from remote working to entertainment and shopping. Now, all eyes are currently on FAANGs ahead of its quarterly results.

Streaming giant Netflix NFLX, the first company in the FAANG group to report Q3 earnings, came up with disappointing results on Oct 20. The company registered its weakest subscriber gains in four years and missed the earnings estimate (read: Netflix Disappoints: ETFs in Focus).

Facebook

Facebook is expected to release its earnings report on Oct 29 after market close. Our proven model predicts reasonable chances of beating estimates for Facebook this time around as it has a Zacks Rank #3 (Hold) and an Earnings ESP of +1.82%. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The social media giant has seen positive earnings estimate revision of a penny for the to-be-reported quarter over the past 30 days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. However, the current Zacks Consensus Estimate for the yet-to-be reported quarter indicates an earnings decline of 9% from the year-ago reported figure. Revenues are expected to increase 12.2%. Facebook delivered earnings surprise of 9.11%, on average, in the last four quarters. The stock has a VGM Score of B but belongs to a bottom-ranked Zacks industry (bottom 19%). Shares of FB were up nearly 19% in the past three months.
 

Facebook, Inc. Price, Consensus and EPS Surprise

Facebook, Inc. Price, Consensus and EPS Surprise
Facebook, Inc. Price, Consensus and EPS Surprise

Facebook, Inc. price-consensus-eps-surprise-chart | Facebook, Inc. Quote

Amazon

Amazon, slated to report on Oct 29 after market close, has a Zacks Rank #3 and an Earnings ESP of +34.39%. The stock saw positive earnings estimate revision of a couple of cents over the past 30 days for the second quarter. The Zacks Consensus Estimate represents substantial year-over-year earnings growth of 71.9%.

Amazon’s earnings surprise history is impressive, with an average beat of 132.03% for the last four quarters. Additionally, the company is expected to report revenue growth of 32.7%. The stock has a top VGM Score of B and falls under a top-ranked Zacks industry (top 31%). The online e-commerce behemoth has witnessed share price increase of 5% over the past three months.
 

Amazon.com, Inc. Price, Consensus and EPS Surprise

Amazon.com, Inc. Price, Consensus and EPS Surprise
Amazon.com, Inc. Price, Consensus and EPS Surprise

Amazon.com, Inc. price-consensus-eps-surprise-chart | Amazon.com, Inc. Quote

Apple

Apple has a Zacks Rank #3 and an Earnings ESP of +2.97%. The stock saw no earnings estimate revision over the past 30 days for the fiscal fourth quarter and its earnings surprise history is strong. It delivered an earnings surprise of 16.43%, on average, over the past four quarters. Apple is expected to suffer substantial earnings decline of 9.2% from the year-ago quarter. Revenues are expected to fall a modest 0.5% year over year. It has a VGM Score of B and belongs to a top-ranked Zacks industry (top 48%). The stock has rallied nearly 21% over the past three months. Apple is set to report earnings on Oct 29 after market close (read: ETFs Popping on Apple and Amazon Events).

Apple Inc. Price, Consensus and EPS Surprise

Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. Price, Consensus and EPS Surprise

Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote

Alphabet

Alphabet has a Zacks Rank #2 and an Earnings ESP of +7.40%. It saw solid earnings estimate revision of 13 cents over the past 30 days for the to-be-reported quarter and its earnings are expected to grow 12.1%. Its earnings surprise track over the past four quarters is good with the beat being 3.97%, on average. Revenues are expected to grow 6.9% from the year-ago quarter. However, the stock falls under a bottom-ranked Zacks industry (bottom 19%). The Internet behemoth has gained about 4% in the past three months. The company will report after the closing bell on Oct 29 (see: all the Technology ETFs here).

Alphabet Inc. Price, Consensus and EPS Surprise

Alphabet Inc. Price, Consensus and EPS Surprise
Alphabet Inc. Price, Consensus and EPS Surprise

Alphabet Inc. price-consensus-eps-surprise-chart | Alphabet Inc. Quote

ETFs to Tap

Given this, investors may want to play these stocks with the help of ETFs. Below we have highlighted five ETFs having the largest exposure to FAANGs.

MicroSectors FANG+ ETN FNGS: This ETN accounts for 10% share in each of the FAANG stocks and has a Zacks ETF Rank #3.

Invesco QQQ QQQ: This fund makes up for 31.8% share in FAANGs and has a Zacks ETF Rank #1 with a Medium risk outlook.

iShares Evolved U.S. Technology ETF IETC: This fund accounts for 29.2% share in FAANG stocks.

iShares North American Tech ETF (IGM): This product accounts for about 26.9% in the FAANG group and has a Zacks ETF Rank #2 with a Medium risk outlook (read: 5 Top-Ranked Tech ETFs to Buy on Decade's Strongest PC Growth).

iShares Russell 1000 Growth ETF IWF: This ETF allocates a combined 25.2% share in FAANG stocks and has a Zacks ETF Rank #1 with a Medium risk outlook.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
Invesco QQQ (QQQ): ETF Research Reports
 
Facebook, Inc. (FB) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
iShares Russell 1000 Growth ETF (IWF): ETF Research Reports
 
iShares Evolved U.S. Technology ETF (IETC): ETF Research Reports
 
MICRSFANG (FNGS): ETF Research Reports
 
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