The cautionary tale with the materials sector is expected earnings growth or lack thereof. “The Materials sector has witnessed the largest dip in expected earnings growth (to -2.1% from 8.7%) since the start of the quarter. Companies in the Metals & Mining industry have seen major reductions to EPS estimates during this time,” according to FactSet data.
In the six years ending 2013, XLB only outperformed the S&P 500 twice – in 2009 and 2010. At the fundamental level, materials stocks are a tad pricy compared to the S&P 500. On a relative basis, the materials sector is trading above its long-term price-to-earnings, price-to-book and price-to-operating cash flow ratios.
Materials Select Sector
