This article was originally published on Finbox.io.
The new earnings season has officially begun and as expected, has been a story of growth so far. According to Zack’s Investment Research, 57 members of the S&P 500 have reported as of
Wednesday, April 19th. Total earnings from these companies have grown 18.7 percent in Q1'17 compared to 11.0 percent in Q4'16.
Revenues are also up 6.4 percent in Q1'17 compared to 3.7 percent in Q4'16. Additionally, 75 percent of these companies have also
beat their EPS estimates. Overall, S&P 500 member earnings are on pace to reach their highest level in nearly two years.
While only 11 percent of the S&P 500 member companies have reported, one sector that has outperformed has been materials. So
far these companies have reported total earnings growth of 31.6 percent on 12.0 percent revenue growth while 100 percent have beat
their estimates. These materials stocks have seen a positive 1.1 percent price impact immediately following earnings which compares
favorably to the -0.6 percent impact for the entire 57 company group that has reported thus far.
Here are five stocks in the materials sector that are fundamentally undervalued and ready to takeoff on earnings.
5 Materials Stocks That Could Takeoff On Earnings
Using this stock screen, we found five materials stocks expected to report earnings
this week (4/24 - 4/28) that are trading below their finbox.io fair value estimate: Allegheny Technologies
Incorporated (NYSE: ATI), Owens-Illinois
Inc (NYSE: OI), Carpenter Technology
Corporation (NYSE: CRS), Coeur Mining
Inc (NYSE: CDE) and Huntsman
Corporation (NYSE: HUN).
Allegheny Technologies Incorporated produces and sells specialty materials and components worldwide. The company is expected to
report earnings on Tuesday before the market opens and appears 30 percent undervalued when applying Wall Street estimates to seven
separate cash flow analyses
View all 7 valuation models that derive ATI's fair value estimate.
Owens-Illinois manufactures and sells glass containers to food and beverage manufacturers worldwide. The company is expected to
report earnings on Monday after the market closes. Although shares currently trade near their 52 week high, the stock still has
roughly 15 percent upside purely on a fundamental basis.
View all 6 valuation models that derive OI's fair value estimate.
Carpenter Technology manufactures, fabricates, and distributes specialty metals worldwide and is expected to report earnings on
Thursday before the market opens. Finbox.io's $39.27 intrinsic value estimate is right in line with Wall Street's $39.33 target
which implies over 12 percent upside.
View all 7 valuation models that derive CRS' fair value estimate.
Coeur Mining owns, operates, explores for, and develops silver and gold properties. Earnings are expected to be reported on
Wednesday after the market closes while nine cash flow models imply 12 percent upside. This is well below the $12.39 average price
target derived from nine Wall Street analysts suggesting the stock is 30 percent undervalued.
View all 9 valuation models that derive CDE's fair value estimate.
Huntsman manufactures and sells differentiated organic and inorganic chemical products worldwide. The company recently announced
the spin-off of its pigments & additives segment on September 7, 2016 which is expected to close in the first half of this year.
The reasoning for the spin-off is that Venator Materials (SpinCo) is expected to command a higher valuation
However, on a combined basis Huntsman still appears fundamentally undervalued. Expect an update on the spin-off when the company
reports earnings on Wednesday before the market opens.
View all 8 valuation models that derive HUN's fair value estimate.
These stocks in the materials sector all have strong fundamentals and could easily trade higher following a positive earnings
announcement.
If the first week of the Q1'17 earnings season is any indicator for how the materials sector is going to fare, investors may
want to take a closer look at these names prior to them reporting.
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