What's In Store For FAANG ETFs In Q2 Earnings?

The so-called FAANG stocks — Facebook (NASDAQ:FB) , Amazon (NASDAQ:AMZN) , Apple (NASDAQ:AAPL) , Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL) — have been on a tear lately thanks to a trade truce between the world’s two largest economies and Fed’s dovish stance. However, government crackdown and global growth worries remain an overhang on these stocks.

Streaming giant, Netflix, the first company in the FAANG group to report Q2 earnings on Jul 17, disappointed investors by losing U.S. subscribers for the first time in eight years and missing targets for overseas customers. Shares of NFLX declined more than 10% following the results. The other four members are due to report this week and the next (read: Netflix Posts Q2 U.S. Subscriber Loss: ETFs to Watch).

Facebook

Facebook is expected to release its earnings report on Jul 24 after market close. It has a Zacks Rank #2 (Buy) and an Earnings ESP of +0.61%. According to our methodology, a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) when combined with a positive Earnings ESP increases our chances of predicting an earnings beat, while stocks with a Zacks Rank #4 or 5 (Sell rated) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The social media giant saw no earnings estimate revision for the to-be-reported quarter over the past month. The current Zacks Consensus Estimate indicates earnings increase of 9.2% from the year-ago reported figure. Revenues are expected to increase 24.3% in the quarter. However, Facebook came up with an average negative earnings surprise of 4.79% for the last four quarters. The stock has a solid Momentum Score of A and belongs to a top-ranked Zacks industry (top 40%). Shares of FB have climbed 8% in the past three months.

Amazon

Amazon, slated to report on Jul 25 after market close, has a Zacks Rank #1 and an Earnings ESP of +15.56%. The stock has seen positive earnings estimate revision of a penny over the past 30 days for the second quarter. The Zacks Consensus Estimate indicates an increase of 4.35% from the year-ago reported figure.

Amazon’s earnings surprise history is also impressive, with positive earnings surprise of 60.25% on average for the last four quarters. Additionally, the company is expected to report revenue growth of 18.20%. The stock has a solid Growth Score of B and falls under the top-ranked Zacks industry (top 19%). The online e-commerce behemoth has witnessed an increase of 2.2% over the past three months (read: Amazon Prime Day Smashes Record: 5 ETF Deals).

Apple

Apple has a Zacks Rank #3 and an Earnings ESP of +1.35%. The stock saw no earnings estimate revision over the past 30 days for the second quarter and its earnings surprise history is strong. It delivered average positive earnings surprise of 4.04% over the past four quarters. However, Apple is expected to post substantial earnings decline of 9.40%. Revenues are expected to increase 0.09% year over year in the second quarter. It boasts a solid Value and Growth Score of B each and belongs to a top-ranked Zacks Industry (top 7%). The stock has shed 2.4% over the past three months. Apple is set to report earnings on Jul 30 (see: all the Technology ETFs here).

Alphabet

Alphabet has a Zacks Rank #4 and an Earnings ESP of -1.70%. Though it saw positive earnings estimate revision of a couple of cents over the past 30 days for the to-be-reported quarter, its earnings are expected to decline 2.13%. Additionally, its earnings surprise track over the past four quarters is good with the average beat being 19.02%. Further, the stock sports a solid Growth Score of B. Revenues are expected to increase 17.76% from the year-ago quarter. The Internet behemoth falls under a top-ranked Zacks industry (top 40%) and has lost nearly 11% in the past three months. The company will report after the closing bell on Jul 25.

ETFs to Tap

Given the expected strong earnings, investors may want to play these stocks with the help of ETFs. Below, we have highlighted four ETFs having the largest exposure to FAANGs.

Invesco QQQ QQQ: This fund makes up for 30.8% share in FAANGs and has a Zacks ETF Rank #1.

iShares North American Tech ETF (TSX:IGM) : This product accounts for about 28.8% in the FAANG group and has a Zacks ETF Rank #2.

iShares Evolved U.S. Technology ETF IETC: This fund accounts for 26.5% share in FAANG stocks.

iShares Russell 1000 Growth ETF IWF: This ETF allocates a combined 19.1% share in FAANG stocks and has a Zacks ETF Rank #1 (read: U.S. ETFs Hit $4 Trillion in AUM: 4 Reasons Behind the Boom).

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