The so-called FANG stocks, which have powered the U.S. stock market rally in the ongoing Trump era, lost their sheen last month amid the worst tech rout. Notably, the NYSE FANG index, which tracks the 10 biggest and most-active tech stocks in the world, slipped into deep correction territory (down more than 10% from its latest peak) at the end of last month.
The steep sell-off was driven by a spate of negative news from these key companies from the Facebook (FB – Free Report) data scandal to Trump’s series of allegations on Amazon (AMZN – Free Report) . However, the FANG stocks sprung back to life in the latest week on optimism of strong earnings. Per the Earnings Trends report, the technology sector is expected to see earnings growth of 20.8% and revenue growth of 11.4% for the first quarter.
As a result, FANG-based ETFs, namely PowerShares NASDAQ Internet Portfolio (PNQI – Free Report) , First Trust Dow Jones Internet Index Fund (FDN – Free Report) and New Tech and Media ETF (FNG – Free Report) rose at least 1% over the past week. The smooth trading is likely to continue heading into the Q1 earnings season. PNQI has the largest 31.6% share in this group, followed by 28.2% in FDN and 24% in FNG.
Let’s dig deeper into the earnings picture of these companies that would drive the performance of the above-mentioned funds in the coming days:
According to the our methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) when combined with a positive Earnings ESP increases our chances of predicting an earnings beat, while a Zacks Rank #4 or 5 (Sell rated) are best avoided.
Inside Our Surprise Prediction
Facebook has a Zacks Rank #4 and an Earnings ESP of +1.20%. Facebook witnessed negative earnings estimate revision of a penny over the past month for the to-be-reported quarter but delivered positive surprises in the last four quarters, with an average beat of 15.78%. The stock has a VGM Style Score of C. Facebook is expected to release its earnings report on Apr 25, after market close.
