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What Lies Ahead for PPG Industries (PPG) in Q4 Earnings?
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PPG Industries Inc. (PPG - Free Report) is set to release its fourth-quarter and full-year 2016 results before the market opens on Jan 19.
In the last quarter, the company’s earnings were in line with the Zacks Consensus Estimate of $1.56 per share. It saw higher profits in the quarter, aided by its cost-management initiatives, successful commercialization of innovative new products and higher sales. PPG Industries has surpassed the Zacks Consensus Estimate in two of the trailing four quarters, with an average beat of 0.33%.
Let’s see how things are shaping up for this announcement.
In Oct 2016, PPG Industries announced a share repurchase program worth $2 billion, which had been authorized by its board. This is in addition to the company’s existing share repurchase authorization that was approved in 2014 and had around $520 million remaining, as of Sep 30, 2016.
PPG Industries has deployed around $1.85 billion of cash on acquisitions and share buybacks, inclusive of share repurchases worth roughly $250 million completed during the third quarter of 2016, against its earlier stated target of $2−$2.5 billion for 2015 and 2016 combined. The company aims to deploy at least $650 million in the fourth quarter, which would place it at the top end of the deployment target.
PPG Industries has undertaken aggressive cost cutting and restructuring initiatives. The company recently announced restructuring measures to lower its cost structure globally. For these measures, the company expects to record a pretax restructuring charge in fourth quarter 2016 of $190−$200 million, or 53−58 cents per share. Roughly $140 million of this corresponds to cash costs while $50−$60 million is related to non-cash costs, including the write-down of certain assets. The company recorded adjusted earnings of $1.23 per share a year ago.
In the fourth quarter, PPG Industries completed the sale of its 50% ownership interest in its two PFG Fiber Glass joint ventures. The company received proceeds of around $170 million from the stake sale. The company also completed the sale of its fiber glass business in Europe in the quarter.
However, PPG Industries faces a number of headwinds, stemming from macroeconomic challenges in Europe and weakness in some U.S. markets. The company is facing weak demand in Europe, evident from the slower-than-expected growth in the third quarter. The company is also facing weakness in the heavy-duty equipment market in the industrial coatings business. Moreover, softness in the marine new-build market, along with weak demand in the oil and gas end-use market, has been hurting protective and marine coatings’ sales.
PPG Industries expects just a modest improvement in global demand and projects year-over-year earnings growth in fourth-quarter 2016 to be similar or modestly higher than that of the third quarter.
PPG Industries’ earnings are also heavily exposed to unfavorable currency fluctuations. The company expects an unfavorable currency impact of $320--$350 million on its sales and $50--$60 million on its pre-tax earnings for full-year 2016.
PPG Industries’ shares gained almost 4% in the last three months while the Zacks categorized Chemicals-Diversified industry gained about 11.4% over the same period.
Earnings Whispers
Our proven model does not conclusively show that PPG Industries is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP for PPG Industries is currently pegged at 0.00%. This is because the Most Accurate estimate as well as the Zacks Consensus Estimate are both pegged at $1.19. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PPG Industries carries a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
Stocks to Consider
Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Albemarle Corporation (ALB - Free Report) has an Earnings ESP of +2.67% and a Zacks Rank #2.
Celanese Corporation (CE - Free Report) has an Earnings ESP of +2.65% and carries a Zacks Rank #2.
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How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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What Lies Ahead for PPG Industries (PPG) in Q4 Earnings?
PPG Industries Inc. (PPG - Free Report) is set to release its fourth-quarter and full-year 2016 results before the market opens on Jan 19.
In the last quarter, the company’s earnings were in line with the Zacks Consensus Estimate of $1.56 per share. It saw higher profits in the quarter, aided by its cost-management initiatives, successful commercialization of innovative new products and higher sales. PPG Industries has surpassed the Zacks Consensus Estimate in two of the trailing four quarters, with an average beat of 0.33%.
Let’s see how things are shaping up for this announcement.
PPG Industries, Inc. Price and EPS Surprise
PPG Industries, Inc. Price and EPS Surprise | PPG Industries, Inc. Quote
What Lies Ahead?
In Oct 2016, PPG Industries announced a share repurchase program worth $2 billion, which had been authorized by its board. This is in addition to the company’s existing share repurchase authorization that was approved in 2014 and had around $520 million remaining, as of Sep 30, 2016.
PPG Industries has deployed around $1.85 billion of cash on acquisitions and share buybacks, inclusive of share repurchases worth roughly $250 million completed during the third quarter of 2016, against its earlier stated target of $2−$2.5 billion for 2015 and 2016 combined. The company aims to deploy at least $650 million in the fourth quarter, which would place it at the top end of the deployment target.
PPG Industries has undertaken aggressive cost cutting and restructuring initiatives. The company recently announced restructuring measures to lower its cost structure globally. For these measures, the company expects to record a pretax restructuring charge in fourth quarter 2016 of $190−$200 million, or 53−58 cents per share. Roughly $140 million of this corresponds to cash costs while $50−$60 million is related to non-cash costs, including the write-down of certain assets. The company recorded adjusted earnings of $1.23 per share a year ago.
In the fourth quarter, PPG Industries completed the sale of its 50% ownership interest in its two PFG Fiber Glass joint ventures. The company received proceeds of around $170 million from the stake sale. The company also completed the sale of its fiber glass business in Europe in the quarter.
However, PPG Industries faces a number of headwinds, stemming from macroeconomic challenges in Europe and weakness in some U.S. markets. The company is facing weak demand in Europe, evident from the slower-than-expected growth in the third quarter. The company is also facing weakness in the heavy-duty equipment market in the industrial coatings business. Moreover, softness in the marine new-build market, along with weak demand in the oil and gas end-use market, has been hurting protective and marine coatings’ sales.
PPG Industries expects just a modest improvement in global demand and projects year-over-year earnings growth in fourth-quarter 2016 to be similar or modestly higher than that of the third quarter.
PPG Industries’ earnings are also heavily exposed to unfavorable currency fluctuations. The company expects an unfavorable currency impact of $320--$350 million on its sales and $50--$60 million on its pre-tax earnings for full-year 2016.
PPG Industries’ shares gained almost 4% in the last three months while the Zacks categorized Chemicals-Diversified industry gained about 11.4% over the same period.
Earnings Whispers
Our proven model does not conclusively show that PPG Industries is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP for PPG Industries is currently pegged at 0.00%. This is because the Most Accurate estimate as well as the Zacks Consensus Estimate are both pegged at $1.19. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PPG Industries carries a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
Stocks to Consider
Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Methanex Corporation (MEOH - Free Report) has an Earnings ESP of +53.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle Corporation (ALB - Free Report) has an Earnings ESP of +2.67% and a Zacks Rank #2.
Celanese Corporation (CE - Free Report) has an Earnings ESP of +2.65% and carries a Zacks Rank #2.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>