LIN - Materials: Seeking Alpha Quant Ratings' top picks heading into Q4 earnings

2024-01-12 13:53:22 ET

Looking back at the final three months of 2023 as the fourth quarter earnings kick-off, the S&P 500 Materials sector (SP500-15) climbed 10.56% , closely tracking the broader market, with the Materials Select Sector SPDR Fund ( NYSEARCA: XLB ) gaining 10.36%.

The S&P 500 Materials sector boasts of a wide range of industries and belongs to companies that manufacture, mine, and produce the core materials that make production possible for every company, and some of the big names include Linde ( LIN ), Sherwin-Williams Company ( SHW ), Freeport-McMoRan ( FCX ), Air Products and Chemicals ( APD ), and Newmont ( NEM ).

Looking closer at the space with the help of Seeking Alpha's Quant Rating system, the materials sector gets a score of 3.06. The Quant Rating system assigns grades according to quantitative measures, like valuation, earnings growth, and recent stock performance, with the highest possible score of 5.

Looking into individual companies in the sector, out of the 22 stocks, fertilizer maker CF Industries ( CF ) and chemical producer DuPont ( DD ) top the quant rating chart with a ‘Buy’ rating. However, while CF Industries ( CF ) earns an A+ in profitability, DuPont gets an A.

FMC Corp ( FMC ), which was downgraded to Neutral at Mizuho on weak earnings during the second half of the year, is the only company in the pack with a ‘Sell’ rating. FMC has however, guided for FY 2024 adjusted EBITDA of $1.025B-$1.125B, up 8% at the midpoint from guidance for 2023.

Meanwhile, the world's largest lithium producer Albemarle ( ALB ), top gold miner Newmont ( NEM ), chemical maker Dow ( DOW ), and Linde ( LIN ) had scores ranging between 2.85 – 3.37, and all were rated "Hold" by the Quant system.

According to Goldman Sachs, materials ( XLB ) is expected to have negative EPS growth of -22% in the fourth quarter. compared to the S&P 500 Index, which had a 3% EPS growth year-over-year estimate in the fourth quarter of 2023.

More on Materials Select Sector SPDR ETF

• XLB: Materials Dashboard For December
• XLB: The ETF That Beat The S&P 500
• XLB: S&P500 Materials ETF rises in 2023, CE, MLM, ECL among top movers
• Materials Sector Weekly Round-up: Cabot at the top; Sigma Lithium reaches bottom
• Seeking Alpha’s Quant Rating on Materials Select Sector SPDR ETF

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