The materials sector, which tends to be the most sensitive to global economic growth expectations, has been performing well this year, given a resilient U.S. economy. The popular ETFs — Materials Select Sector SPDR XLB, Vanguard Materials ETF VAW, iShares U.S. Basic Materials ETF IYM and Fidelity MSCI Materials Index ETF FMAT — have gained 4.2%, 3.2%, 3.3% and 3.1%, respectively, so far this year.

Going into the Q1 earnings season, earnings releases from the sector giants will determine the movement of these funds. Some well-known players in the space, like Linde plc LIN, Air Products & Chemicals APD, Dow Inc. DOW, Ecolab Inc. ECL, Nucor NUE and Newmont NEM, will report earnings in the coming days. Let’s delve into the earnings picture of these companies, as that would drive the performance of the funds dominated by them. These stocks collectively account for a 46.3% share in IYM, 45.3% in XLB, 35.7% in FMAT and 34.7% in VAW (see: all the Materials ETFs here).

According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Inside Our Surprise Prediction for These Stocks

Linde has an Earnings ESP of 0.00% and a Zacks Rank #2. The company witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter. The stock’s earnings surprise track over the past four quarters has been good, with an average beat of 4.19%. The company will report earnings on May 2, before market open.

Air Products & Chemicals has an Earnings ESP of -2.26% and a Zacks Rank #3. It saw no earnings estimate revision over the past 30 days for the to-be-reported quarter and has delivered a positive earnings surprise of 0.45%, on average, for the last four quarters. The company is scheduled to report on Apr 30 before market open.

Dow is scheduled to release earnings on Apr 25 before the opening bell. It has an Earnings ESP of +2.28% and a Zacks Rank #3. Over the past 30 days, the stock saw a positive earnings estimate revision of a penny for the to-be-reported quarter. The company delivered an earnings surprise of 20.76% in the last four quarters, on average.

Ecolab is set to release earnings on Apr 30 before the opening bell. It has an Earnings ESP of -0.82% and a Zacks Rank #2. The stock has seen no earnings estimate revision over the past month for the to-be-reported quarter and delivered an earnings surprise of 1.70%, on average, in the last four quarters (read: ETF Strategies to Play Hot Inflation Data).

Nucor, which is slated to release earnings on Apr 22, after the closing bell, has an Earnings ESP of +0.64% and a Zacks Rank #3. It has seen a negative earnings estimate revision of 21 cents over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 9.92%, on average, in the last four quarters.

Newmont has an Earnings ESP of -28.71% and a Zacks Rank #3. The company saw a positive earnings estimate revision of a couple of cents over the past seven days for the to-be-reported quarter. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. However, it delivered a negative earnings surprise of 2.61%, on average, over the last four quarters. The company is scheduled to report earnings on Apr 25 before the opening bell.

Summing Up

While the sector is expected to post a double-digit earnings decline of 28.8%, per the latest Earnings Trends report, some of the major players have reasonable chances of beating earnings estimates, Additionally. the sector has a favorable Zacks Rank in the top 44%, suggesting that material ETFs might see some smooth trading in the weeks ahead. Additionally, the abovementioned ETFs have a favorable Zacks ETF Rank #2 or #3.

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Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report

Ecolab Inc. (ECL) : Free Stock Analysis Report

Nucor Corporation (NUE) : Free Stock Analysis Report

Dow Inc. (DOW) : Free Stock Analysis Report

Newmont Corporation (NEM) : Free Stock Analysis Report

Materials Select Sector SPDR ETF (XLB): ETF Research Reports

Linde PLC (LIN) : Free Stock Analysis Report

Fidelity MSCI Materials Index ETF (FMAT): ETF Research Reports

Vanguard Materials ETF (VAW): ETF Research Reports

iShares U.S. Basic Materials ETF (IYM): ETF Research Reports

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