Material ETFs Stand Tall Amid Weak Q4 Earnings

Basic materials is one of the weakest sectors this reporting cycle. Earnings from about 70.5% of the sector’s total market capitalization reported so far are down 5.5% on 0.6% revenue growth.

Let’s dig into the earnings report of some of the well-known players in the sector:

Earnings in Focus

U.S. chemical giant DowDuPont (DWDP - Free Report) reported earnings per share of 88 cents, missing the Zacks Consensus Estimate by a penny but improving 6% from the year-ago quarter. Revenues were flat year over year at $20.1 billion but fell short of the estimated $20.1 billion.

PPG Industries (PPG - Free Report) topped earnings estimates but lagged on revenues. Earnings per share of $1.15 came ahead of the Zacks Consensus Estimate of $1.09, while revenues of $3.64 billion were slightly below the estimated $3.65 billion. On a year-over-year basis, earnings were up 73%, while revenues dipped 1%.

Industrial gas giant Air Products & Chemicals (APD - Free Report) lagged on both fronts. Earnings per share were below the Zacks Consensus Estimate by a penny and revenues fell shy by $65 million. Earnings were up 4% while revenues came on par with the year-ago quarter.

Chemical maker LyondellBasell Industries (LYB - Free Report) came up with earnings of $1.83 per share, trailing the Zacks Consensus Estimate of $2.13. Revenues of $8.9 billion also lagged the estimated $9.22 billion and fell 2.8% year over year.  

ETFs in Focus

Given a string of downbeat results, the material sector is down 1.8% (aggregate one-day stock market reaction to earnings releases) in response to earnings announcements. However, it was unable to take the sheen away from material ETFs that are up nearly 1% over the past week. Below we have highlighted those ETFs that have the top 10 holdings in these chemical titans. All these have a Zacks ETF Rank #3 (Hold), suggesting potential upside in the coming weeks.

iShares U.S. Basic Materials ETF (IYM - Free Report)

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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