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PPG Industries (PPG) Up 5.1% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for PPG Industries (PPG - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PPG Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PPG Industries logged net income from continuing operations of $431 million or $1.80 per share in second-quarter 2021, up from the year-ago quarter’s profit of $99 million or 42 cents per share.
Barring one-time items, adjusted earnings were $1.94 per share in the reported quarter, up from $1.09 logged in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of $2.19.
Net sales rose roughly 44.6% year over year to $4,359 million. However, the figure missed the Zacks Consensus Estimate of $4,418.2 million. Sales volumes were up around 24% year over year on the back of strong demand recovery across many end-use markets. Favorable foreign currency translation impact was around 6%, while acquisition contributed around 11% to sales growth. Selling prices rose roughly 3.5%.
The company benefited from higher year-over-year sales in the Industrial Coatings segment in the quarter, led by recovery in global industrial demand. It also witnessed strength in global architectural coatings business. However, supply disruptions coupled with higher raw material and transportation costs hurt its results.
Segment Highlights
Performance Coatings: Net sales in the segment were around $2.7 billion in the second quarter, up around 33% year over year. Sales volume in the segment increased around 9%. Selling prices rose more than 3%.
Segment income increased roughly 25% year over year to $454 million. The upside can be attributed to the impact of the improved sales volumes, increased selling prices and higher demand for architectural trade products.
Industrial Coatings: Sales in the segment totaled around $1.6 billion, up around 70% from the prior-year quarter’s figure. Sales volumes rose 56% year over year due to recovery in global industrial demand. Selling prices were also up 4% year over year.
Net income in the segment totaled $190 million, up around 458% year over year. Results were driven by restructuring cost savings, higher sales volumes and favorable currency impact.
Financials
PPG Industries ended the second quarter with cash and cash equivalents of $1,195 million, down roughly 46.9% year over year. Long-term debt rose around 38.5% year over year to $6,387 million.
Moreover, PPG Industries delivered almost $40 million of incremental structural cost savings from business restructuring programs in the reported quarter. The company forecasts full-year 2021 cost savings of $135 million.
Outlook
The company expects higher aggregate input and logistics costs in the third quarter compared with the second quarter. It will continue to prioritize further selling price increases, which it expects to fully offset raw material cost inflation before the end of 2021, on a run-rate basis.
The overall economic demand growth is projected to remain very broad and strong. As supply conditions normalize, it expects strong sales growth later this year and into 2022 aided by its technology-advantaged products, its diverse geographic and end-use market participation as well as continuing recovery from its aerospace business, the company noted.
PPG Industries also expects structural cost savings from restructuring actions of roughly $30 million year over year in the third quarter. Corporate expenses are expected to increase to $60 million in the third quarter from $52 million in the second quarter. Net interest expenses are expected between $28 million and $30 million.
The company also sees adjusted earnings for the full year to be $7.4-$7.6 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -12.52% due to these changes.
VGM Scores
At this time, PPG Industries has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise PPG Industries has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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PPG Industries (PPG) Up 5.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for PPG Industries (PPG - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PPG Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PPG Industries Misses Q2 Earnings & Sales Estimates
PPG Industries logged net income from continuing operations of $431 million or $1.80 per share in second-quarter 2021, up from the year-ago quarter’s profit of $99 million or 42 cents per share.
Barring one-time items, adjusted earnings were $1.94 per share in the reported quarter, up from $1.09 logged in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of $2.19.
Net sales rose roughly 44.6% year over year to $4,359 million. However, the figure missed the Zacks Consensus Estimate of $4,418.2 million. Sales volumes were up around 24% year over year on the back of strong demand recovery across many end-use markets. Favorable foreign currency translation impact was around 6%, while acquisition contributed around 11% to sales growth. Selling prices rose roughly 3.5%.
The company benefited from higher year-over-year sales in the Industrial Coatings segment in the quarter, led by recovery in global industrial demand. It also witnessed strength in global architectural coatings business. However, supply disruptions coupled with higher raw material and transportation costs hurt its results.
Segment Highlights
Performance Coatings: Net sales in the segment were around $2.7 billion in the second quarter, up around 33% year over year. Sales volume in the segment increased around 9%. Selling prices rose more than 3%.
Segment income increased roughly 25% year over year to $454 million. The upside can be attributed to the impact of the improved sales volumes, increased selling prices and higher demand for architectural trade products.
Industrial Coatings: Sales in the segment totaled around $1.6 billion, up around 70% from the prior-year quarter’s figure. Sales volumes rose 56% year over year due to recovery in global industrial demand. Selling prices were also up 4% year over year.
Net income in the segment totaled $190 million, up around 458% year over year. Results were driven by restructuring cost savings, higher sales volumes and favorable currency impact.
Financials
PPG Industries ended the second quarter with cash and cash equivalents of $1,195 million, down roughly 46.9% year over year. Long-term debt rose around 38.5% year over year to $6,387 million.
Moreover, PPG Industries delivered almost $40 million of incremental structural cost savings from business restructuring programs in the reported quarter. The company forecasts full-year 2021 cost savings of $135 million.
Outlook
The company expects higher aggregate input and logistics costs in the third quarter compared with the second quarter. It will continue to prioritize further selling price increases, which it expects to fully offset raw material cost inflation before the end of 2021, on a run-rate basis.
The overall economic demand growth is projected to remain very broad and strong. As supply conditions normalize, it expects strong sales growth later this year and into 2022 aided by its technology-advantaged products, its diverse geographic and end-use market participation as well as continuing recovery from its aerospace business, the company noted.
PPG Industries also expects structural cost savings from restructuring actions of roughly $30 million year over year in the third quarter. Corporate expenses are expected to increase to $60 million in the third quarter from $52 million in the second quarter. Net interest expenses are expected between $28 million and $30 million.
The company also sees adjusted earnings for the full year to be $7.4-$7.6 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -12.52% due to these changes.
VGM Scores
At this time, PPG Industries has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise PPG Industries has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.