3 ETFs For This Week's Earnings Reports

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 XLC gained 2.25% last week, dealing with reports from Facebook FB and Alphabet GOOG with aplomb.

This week's marquee report among XLC components is Dow component Walt Disney Co 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 NERD jumped 4.78% last week with some help from a bullish earnings report from Electronic Arts EA. That extends NERD's 2020 gain to a stellar 46%.

More potential earnings catalysts loom for NERD this week with Take-Two Interactive TTWO and Activision Blizzard 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 IHF is up just 2% this year despite health insurers keeping costs down as patients eschew elective procedures due to the pandemic.

CVS Health 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.”