Social media giant Meta Platforms
FB
is set to release fourth-quarter fiscal 2021 results on Feb 2 after market close. The stock has lost 8.6% over the past three months but has outperformed the industry’s average loss of 17.1%. The outperformance might continue as Meta Platforms has chances of beating on earnings (read:
ETFs in Focus Ahead of Big Tech Q4 Earnings
).
Image Source: Zacks Investment Research
This has put focus on ETFs —
Communication Services Select Sector SPDR Fund
XLC
,
Fidelity MSCI Communication Services Index ETF
FCOM
,
Vanguard Communication Services ETF
VOX
,
iShares Global Comm Services ETF
IXP
and
UPHOLDINGS Compound Kings ETF
KNGS
— with a substantial allocation to this social media giant.
Earnings Whispers
Meta Platforms has a Zacks Rank #3 (Hold) and an
Earnings ESP
of +2.52%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
Meta Platforms saw no earnings estimate revision over the past 30 days for the soon-to-be-reported quarter. The Zacks Consensus Estimate for Q4 earnings indicates a decline of 2.6% from the year-ago reported figure. Revenues are expected to increase 17.7% in the to-be-reported quarter. Meta Platforms delivered an average earnings surprise of 19.84% in the past four quarters.
The stock belongs to a bottom-ranked Zacks Industry (
bottom 36%
) but has a VGM Score of A. The Zacks Consensus Estimate for the average target price is $394.29, with nearly 88% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.
What to Watch
As Facebook recently changed its name to Meta Platforms, investors are keen to watch the updates for augmented and virtual reality products. The Oculus VR platform is a critical part of management’s plan to build a foundational platform for the metaverse, which the company sees as the next transformational iteration of the Internet (read:
Nasdaq ETFs to Log Worst Month Since 2008? 5 Stocks Up 20%+
).
ETFs to Watch
Communication Services Select Sector SPDR Fund (XLC)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $12.4 billion in its asset base. It follows the Communication Services Select Sector Index and holds 27 stocks in its basket, with Meta Platforms occupying the top position at 22.2%. About half of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two.
Communication Services Select Sector SPDR Fund charges 12 bps in annual fees and trades in an average daily volume of 7 million shares. It has a Zacks ETF Rank #3 (Hold).
Fidelity MSCI Communication Services Index ETF (FCOM)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 114 stocks in its basket, with Meta Platforms occupying the top position at 17.4%. Interactive media & services takes the top spot at 47.6%, while media, entertainment and diversified telecommunication services round off the next three positions.
Fidelity MSCI Communication Services Index ETF has amassed $746.9 million in its asset base and trades in an average daily volume of 131,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
Vanguard Communication Services ETF (VOX)
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 113 stocks in its basket, Meta Platform takes the top spot with a 17.3% share. Interactive media & services is the top sector, accounting for 47.6% of the portfolio, while movies & entertainment, cable & satellite, and integrated telecommunication services round off the next three.
Vanguard Communication Services ETF has AUM of $3.7 billion and trades in a good volume of 247,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook (read:
2 Tech ETF Areas Likely to Stay Strong Despite Rising Rate Worries
).
iShares Global Comm Services ETF (IXP)
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 74 stocks in its basket, with Meta Platforms taking the top spot at 15.6% share. Interactive media & services dominates the fund’s return at 47.5%, followed by integrated telecommunication services (19.3%).
iShares Global Comm Services ETF has amassed $242.7 million in its asset base while trading at an average daily volume of 26,000 shares. Expense ratio comes in at 0.43%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
UPHOLDINGS Compound Kings ETF (KNGS)
UPHOLDINGS Compound Kings ETF is actively managed and seeks long-term growth and income primarily by investing in compounders: companies with the potential to reinvest their own cash flow at above-average rates of return. It holds 26 stocks in its basket, with Meta Platforms taking the top spot with 16.4% of assets.
UPHOLDINGS Compound Kings ETF has accumulated $10 million in its asset base since its debut last December and charges 60 bps on an annual basis. It trades in a volume of 3,000 shares per day on average.
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