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There are quite a few Basic Materials sector stocks that are standing out ahead of their quarterly results this week.
Going into their first-quarter earnings reports here are 2 highly-ranked Zacks Basic Materials stocks that investors certainly want to pay attention to.
Starting out is special chemicals company PPG Industries, which is set to report its Q1 earnings on Thursday, April 20. PPG is a global supplier of paints, coatings, chemicals, specialty materials, glass, and fiberglass.
Sporting a Zacks Rank #1 (Strong Buy) earnings estimate revisions have remained higher for PPG over the last quarter. Fiscal 2023 earnings estimates are still up 16% over the last 90 days with FY24 EPS estimates rising 7%.
Image Source: Zacks Investment Research
Q1 Preview: PPG’s Q1 earnings are expected at $1.55 per share, which would be a 13% increase from Q1 2022. Even better, earnings estimates for the quarter have continued to trend higher in the last 30 days and have now soared 16% over the last quarter.
Overall, fiscal 2023 earnings are now projected to jump 16% this year at $7.00 per share compared to EPS of $6.05 in 2022. Plus, fiscal 2024 earnings are projected to rise another 2%.
On the top line, Q1 sales are forecasted to be $4.49 billion, a 4% increase from the prior year quarter. Total sales are now anticipated to be up 4% this year and rise another 3% in FY23 to $19.00 billion. Fiscal 2024 sales would be 19% above pre-pandemic levels with 2019 sales at $15.14 billion.
Image Source: Zacks Investment Research
Earnings ESP: The Zacks Expected Surprise Prediction indicates that PPG should reach its Q1 bottom-line expectations with the Most Accurate Estimate also having earnings at $1.55 per share.
Image Source: Zacks Investment Research
Takeaway: PPG’s top and bottom line growth is starting to stick out this year with its stock trading attractively relative to its past from a price-to-earnings perspective.
Trading at $141 per share, PPG stock trades at 20.1X forward earnings which is nicely below its decade-long high of 27.2X and closer to the median of 18.9X. PPG is a leader in its space and now trades closer to the industry average of 16.3X and not far from the S&P 500’s 19.2X.
Even better, PPG stock is up +12% year to date to top the S&P 500’s +8% and the Chemicals-Specialty Markets +5%. Over the last three years, PPG’s +56% has also beaten the benchmark’s +47% and its Zack Subindustry’s +27%.
Another basic materials stock investors may want to consider buying this week is steel producer Nucor which also releases its Q1 earnings on Thursday, April 20.
Nucor boasts a Zacks Rank #1 (Strong Buy) and has continued to be a beneficiary of higher steel prices which remain above historical levels as shown in the Producer Price Index (PPI) chart below.
Image Source: U.S. Bureau Of Labor Statistics
Nucor’s steel products are used in a variety of places including highways, bridges, reservoirs, utilities, hospitals, schools, airports, stadiums, and high-rise buildings.
Annual earnings estimate revisions have continued to trend up for Nucor. Over the last quarter, Nucor’s FY23 and FY24 EPS estimates have now climbed 26% and 16% respectively. This is a great sign as Nucor's top and bottom line is naturally expected to drop after two consecutive record-setting years for profits.
Image Source: Zacks Investment Research
Q1 Preview: Nucor’s Q1 earnings are expected at $3.81 a share, down -50% from an excellent prior year quarter that saw EPS at $7.67. Fiscal 2023 earnings are now expected to drop -41% to $16.85 per share after an extremely tough-to-follow and record year that saw EPS at $28.79 in 2022.
Fiscal 2024 EPS is forecasted to fall another -23% to $12.97 but the rising earnings estimates offer support and this is still above Nucor’s historic levels.
First-quarter sales are forecasted to be $8.17 billion, down -22% from the prior year quarter. Total sales are projected to drop -19% this year and another -12% in FY24 to $29.52 billion although this remains well above 2019 pre-pandemic sales of $22.58 billion.
Image Source: Zacks Investment Research
Earnings ESP: Nucor is expected to reach its first-quarter earnings expectations with the Most Accurate Estimate also having the company’s EPS at $3.81.
Image Source: Zacks Investment Research
Takeaway: The last few years have been exceptional for Nucor with the company bringing in record profits from high steel prices. Despite inflation beginning to ease, Nucor’s bottom line remains robust and the stock looks undervalued considering its P/E ratio.
Nucor stock still trades at just 8.7X forward earnings at around $150 per share. This is 78% below its decade-long high of 41.4X and a 40% discount to the median of 14.5X. Nucor also trades nicely beneath the S&P 500’s P/E average and roughly on par with its industry average of 7.6X.
Nucor stock is up +14% year to date to top the benchmark but slightly trail the Steel-Producers Markets +20%. With that being said, Nucor stock has skyrocketed +312% over the last three years to crush the S&P 500 and outperform its Zacks Subindustry’s +205%.
Bottom Line
With annual earnings estimates much higher for PPG and Nucor this is a good sign that both companies may provide better-than-expected guidance during their Q1 reports. The favorable outlook could be a nice catalyst for PPG and Nucor stock and sustain their strong performances over the last few years.
Furthermore, investors will not want to overlook their ability to act as a hedge against inflation. To that point, both companies still appear to be benefiting from the higher costs of basic materials considiring their earnings estiamtes have gone up.
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2 Basic Materials Stocks to Buy Before Earnings
There are quite a few Basic Materials sector stocks that are standing out ahead of their quarterly results this week.
Going into their first-quarter earnings reports here are 2 highly-ranked Zacks Basic Materials stocks that investors certainly want to pay attention to.
PPG Industries (PPG - Free Report) )
Starting out is special chemicals company PPG Industries, which is set to report its Q1 earnings on Thursday, April 20. PPG is a global supplier of paints, coatings, chemicals, specialty materials, glass, and fiberglass.
Sporting a Zacks Rank #1 (Strong Buy) earnings estimate revisions have remained higher for PPG over the last quarter. Fiscal 2023 earnings estimates are still up 16% over the last 90 days with FY24 EPS estimates rising 7%.
Image Source: Zacks Investment Research
Q1 Preview: PPG’s Q1 earnings are expected at $1.55 per share, which would be a 13% increase from Q1 2022. Even better, earnings estimates for the quarter have continued to trend higher in the last 30 days and have now soared 16% over the last quarter.
Overall, fiscal 2023 earnings are now projected to jump 16% this year at $7.00 per share compared to EPS of $6.05 in 2022. Plus, fiscal 2024 earnings are projected to rise another 2%.
On the top line, Q1 sales are forecasted to be $4.49 billion, a 4% increase from the prior year quarter. Total sales are now anticipated to be up 4% this year and rise another 3% in FY23 to $19.00 billion. Fiscal 2024 sales would be 19% above pre-pandemic levels with 2019 sales at $15.14 billion.
Image Source: Zacks Investment Research
Earnings ESP: The Zacks Expected Surprise Prediction indicates that PPG should reach its Q1 bottom-line expectations with the Most Accurate Estimate also having earnings at $1.55 per share.
Image Source: Zacks Investment Research
Takeaway: PPG’s top and bottom line growth is starting to stick out this year with its stock trading attractively relative to its past from a price-to-earnings perspective.
Trading at $141 per share, PPG stock trades at 20.1X forward earnings which is nicely below its decade-long high of 27.2X and closer to the median of 18.9X. PPG is a leader in its space and now trades closer to the industry average of 16.3X and not far from the S&P 500’s 19.2X.
Even better, PPG stock is up +12% year to date to top the S&P 500’s +8% and the Chemicals-Specialty Markets +5%. Over the last three years, PPG’s +56% has also beaten the benchmark’s +47% and its Zack Subindustry’s +27%.
Nucor (NUE - Free Report) )
Another basic materials stock investors may want to consider buying this week is steel producer Nucor which also releases its Q1 earnings on Thursday, April 20.
Nucor boasts a Zacks Rank #1 (Strong Buy) and has continued to be a beneficiary of higher steel prices which remain above historical levels as shown in the Producer Price Index (PPI) chart below.
Image Source: U.S. Bureau Of Labor Statistics
Nucor’s steel products are used in a variety of places including highways, bridges, reservoirs, utilities, hospitals, schools, airports, stadiums, and high-rise buildings.
Annual earnings estimate revisions have continued to trend up for Nucor. Over the last quarter, Nucor’s FY23 and FY24 EPS estimates have now climbed 26% and 16% respectively. This is a great sign as Nucor's top and bottom line is naturally expected to drop after two consecutive record-setting years for profits.
Image Source: Zacks Investment Research
Q1 Preview: Nucor’s Q1 earnings are expected at $3.81 a share, down -50% from an excellent prior year quarter that saw EPS at $7.67. Fiscal 2023 earnings are now expected to drop -41% to $16.85 per share after an extremely tough-to-follow and record year that saw EPS at $28.79 in 2022.
Fiscal 2024 EPS is forecasted to fall another -23% to $12.97 but the rising earnings estimates offer support and this is still above Nucor’s historic levels.
First-quarter sales are forecasted to be $8.17 billion, down -22% from the prior year quarter. Total sales are projected to drop -19% this year and another -12% in FY24 to $29.52 billion although this remains well above 2019 pre-pandemic sales of $22.58 billion.
Image Source: Zacks Investment Research
Earnings ESP: Nucor is expected to reach its first-quarter earnings expectations with the Most Accurate Estimate also having the company’s EPS at $3.81.
Image Source: Zacks Investment Research
Takeaway: The last few years have been exceptional for Nucor with the company bringing in record profits from high steel prices. Despite inflation beginning to ease, Nucor’s bottom line remains robust and the stock looks undervalued considering its P/E ratio.
Nucor stock still trades at just 8.7X forward earnings at around $150 per share. This is 78% below its decade-long high of 41.4X and a 40% discount to the median of 14.5X. Nucor also trades nicely beneath the S&P 500’s P/E average and roughly on par with its industry average of 7.6X.
Nucor stock is up +14% year to date to top the benchmark but slightly trail the Steel-Producers Markets +20%. With that being said, Nucor stock has skyrocketed +312% over the last three years to crush the S&P 500 and outperform its Zacks Subindustry’s +205%.
Bottom Line
With annual earnings estimates much higher for PPG and Nucor this is a good sign that both companies may provide better-than-expected guidance during their Q1 reports. The favorable outlook could be a nice catalyst for PPG and Nucor stock and sustain their strong performances over the last few years.
Furthermore, investors will not want to overlook their ability to act as a hedge against inflation. To that point, both companies still appear to be benefiting from the higher costs of basic materials considiring their earnings estiamtes have gone up.