Nutrien's Q3 Earnings and Revenues Fall Short of Estimates

The Invesco S&P 500 Equal Weight Materials ETF (RSPM) was launched on 11/01/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Materials - Broad segment of the equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $267.26 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. RSPM seeks to match the performance of the S&P 500 EQUAL WEIGHT MATERIALS INDEX before fees and expenses.

The S&P 500 Equal Weight Materials Index equally weights stocks in the materials sector of the S&P 500 Index.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.40%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.89%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Materials sector--about 100% of the portfolio.

Looking at individual holdings, Freeport-Mcmoran Inc (FCX) accounts for about 4.06% of total assets, followed by Albemarle Corp (ALB) and Cf Industries Holdings Inc (CF).

The top 10 holdings account for about 37.96% of total assets under management.

Performance and Risk

The ETF has added roughly 7.96% and is up about 22.07% so far this year and in the past one year (as of 11/14/2024), respectively. RSPM has traded between $31.09 and $37.59 during this last 52-week period.

The ETF has a beta of 1.10 and standard deviation of 20.06% for the trailing three-year period. With about 29 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco S&P 500 Equal Weight Materials ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RSPM is a reasonable option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $5.50 billion in assets, Materials Select Sector SPDR ETF has $5.69 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.09%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research

Koppers Holdings Inc. KOP logged profits (attributable to the company) of $22.8 million or $1.09 per share for the third quarter of 2024, down from a profit of $26.3 million or $1.22 per share a year ago. Barring one-time items, adjusted earnings were $1.37 per share for the quarter, up from $1.32 per share a year ago. It topped the Zacks Consensus Estimate of $1.25.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Koppers recorded revenues of $554.3 million for the quarter, up around 1% year over year. The top line missed the Zacks Consensus Estimate of $571.8 million. The Railroad and Utility Products and Services (“RUPS”) segment delivered record sales on higher pricing. KOP saw lower sales across Performance Chemicals (PC) and Carbon Materials and Chemicals (“CMC”) segments in the reported quarter.

Koppers Holdings Inc. Price, Consensus and EPS Surprise

Koppers Holdings Inc. price-consensus-eps-surprise-chart | Koppers Holdings Inc. Quote

KOP's Segment Highlights

Sales from the RUPS segment rose around 6% year over year to $248.1 million in the reported quarter. It was below the consensus estimate of $258.9 million. Sales were driven by increased pricing across several markets and increased activity in the railroad bridge services business, partly masked by reduced activity in the crosstie recovery business.

The PC segment recorded sales of $176.7 million in the quarter, down around 1.5% year over year. It was below the consensus estimate of $183.1 million. Sales were impacted as sales to Brown Wood now being affiliated sales.

Sales from the CMC division fell 5.5% year over year to $129.5 million. It missed the consensus estimate of $132.2 million. The downside was due to reduced sales prices across most products and lower volumes of carbon black feedstock.

Koppers' Financials

Koppers ended the quarter with cash and cash equivalents of $44.5 million, down around 9% sequentially. Long-term debt was $975.9 million, down around 1% sequentially.

KOP's Outlook

Koppers anticipates sales for 2024 to be roughly $2.1 billion factoring in the current competitive landscape, global economic conditions and the prevailing uncertainty associated with geopolitical and supply chain challenges. It expects adjusted EBITDA to be in the band of $270-$275 million for the year, including the acquisition of Brown Wood, which was completed on April 1, 2024. Koppers sees adjusted earnings per share to be $4.25-$4.45 for 2024.

The company also expects capital expenditures of roughly $80 million for this year. It sees operating cash flows of around $100-$125 million in 2024, barring any impact from pension termination.

KOP Stock’s Price Performance

Koppers’ shares have lost 13.4% in the past year compared with the Zacks Chemicals Diversified industry’s 4.6% rise.

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is CF Industries (CF). CF is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

CF is also sporting a PEG ratio of 2.38. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CF's PEG compares to its industry's average PEG of 3.15. CF's PEG has been as high as 2.67 and as low as 1.66, with a median of 2.28, all within the past year.

Investors should also recognize that CF has a P/B ratio of 1.91. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.13. Within the past 52 weeks, CF's P/B has been as high as 2.03 and as low as 1.57, with a median of 1.80.

Finally, we should also recognize that CF has a P/CF ratio of 7.25. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.92. CF's P/CF has been as high as 7.95 and as low as 4.79, with a median of 6.78, all within the past year.

These are just a handful of the figures considered in CF Industries's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CF is an impressive value stock right now.

Zacks Investment Research