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Sunday, 05/31/2020 11:58:41 AM

Sunday, May 31, 2020 11:58:41 AM

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>>> What's in Store for Online Retail ETFs This Earnings Season?


Sanghamitra Saha

April 27, 2020

Is the Options Market Predicting a Spike in Groupon (GRPN) Stock?

Online grocery shopping has become a mainstream in most parts of the globe amid lockdowns and social distancing mandates in a desperate attempt to contain the spread of coronavirus.

U.S. online sales of consumer packaged goods (CPG) increased 56% for the week ending April 18, compared to the same period a year earlier, according to data from research and polling firm Nielsen and Rakuten Intelligence.

Online retail ETFs like Amplify Online Retail ETF IBUY (up 28.2%) and ProShares Online Retail ETF ONLN (up 30.9%) have beaten the S&P 500 (up about 14.3%) in the past month.

Against this scenario, let’s take a look at what’s in store for online retail stocks this reporting season and how the related ETFs can be impacted.

Inside the Expected Earnings Performance

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) 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.

Online seller of home décor Wayfair W will report on May 5. This Zacks Rank #2 (Buy) stock has an Earnings ESP of +1.67%. Positive ESP suggests that analysts have recently become bullish on the company's earnings prospects.

Etsy ETSY, the provider of online and offline marketplaces, has a Zacks Rank #2 and is likely to report next on May 6. Etsy has a positive ESP of 8.17%. Zacks Rank #3 Amazon AMZN is about to report on Apr 30 and has an ESP of +5.11%.

Zacks Rank #2 provider of Internet-based postage services Stamps.Com STMP (expected report date May 7) and global marketplace for digital imagery Shutterstock Inc. SSTK (on Apr 28) each has a 0.00% ESP. Zacks Rank #3 (Hold) companies eBay EBAY (Apr 29) and JD. Com JD (expected to report on May 8) also have a 0.00% ESP.

Not all online retail companies look promising in terms of ESP. Zacks Rank #3 Alibaba BABA, Grubhub GRUB and 1-800-Flowers.Com FLWS are likely to report on May 20, May 6 and Apr 30, respectively. Alibaba, Grubhub and 1-800-Flowers have a negative earnings ESP of 5.94%, 22.73%, and 21.21%, respectively.

Impact on ETFs

Overall, the impact on ETFs is likely to be largely favorable as most major holdings have a positive ESP. However, CLIX is having an edge over IBUY as the former is not only long on online retailing but also takes short positions in brick and mortar retailers included on the Solactive-ProShares Bricks and Mortar Retail Store Index. The dual benefits provide CLIX with a better opportunity than IBUY, which only has a bullish view on online retail stocks.