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Can PPG Industries (PPG) Spring a Surprise in Q1 Earnings?
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PPG Industries Inc. (PPG - Free Report) is set to release first-quarter 2017 results ahead of the bell on Apr 20.
In the last quarter, PPG Industries reported adjusted earnings of $1.19 per share, up 1.6% from the year-ago figure of $1.16. The earnings narrowly beat the Zacks Consensus Estimate of $1.18 per share. However, net sales fell by 1.6% year over year to $3,497 million, lower than the Zacks Consensus Estimate of $3,552 million. PPG Industries has surpassed the Zacks Consensus Estimate in three out of four trailing quarters, with an average positive surprise of 0.54%.
Can PPG Industries surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.
The Chairman and CEO of PPG Industries, Michael H. McGarry, in January, said that the company is operating in an uncertain and evolving regulatory and macroeconomic environment. The company expects improved momentum in overall global economic growth, with gradually improving growth rates in developed regions and continuing but uneven growth in emerging regions.
The company is aggressively administering all factors within internal controls to remain competitive. PPG Industries has recently initiated a new restructuring program which is expected to generate $125 million in annual savings. The company also anticipates deploying additional $2.5–$3.5 billion cash in acquisitions and share repurchases for 2017 and 2018 combined to ensure shareholder value creation.
PPG Industries is seeing strength in the North American automotive market. Organic sales of its automotive re-finished coatings business continue to outperform the market, driven by strong demand for the company’s market-leading waterborne products and favorable industry trends. Further, an aggressive cost cutting and restructuring strategy will act as a positive catalyst for the company.
PPG Industries’ shares rallied around 9% over the past three months, outperforming the Zacks categorized Chemicals-Diversified industry’s 3.1% gain.
Revenues of PPG Industries are expected to improve from increased demand in aerospace, automotive and construction space, but due to cyclical factors there could be some short-term macroeconomic challenges going ahead.
In the industrial coatings business, PPG Industries is seeing some weakness in the heavy-duty equipment market. The protective and marine coatings sales are also getting hurt owing to weakness in the marine new-build market and soft demand in the oil and gas end-use market.
Moreover, unfavorable currency exchange translation, especially in emerging markets, reduced its sales by $400 million in 2016. The company expects the trend to continue and create unfavorable currency impact of $375 - $425 million in its sales and $70 - $90 million on its pre-tax earnings for full-year 2017. The company also expects some margin pressure associated with higher than expected raw materials costs (on a year-over-year basis) in first-quarter 2017.
PPG Industries continued the plan to acquire the Dutch paints maker, Akzo Nobel N.V. (AKZOY - Free Report) , by revising the initial offer. The latest offer would provide a 40% premium to shareholders of Akzo Nobel, based on its closing stock price of €64.42 as on Mar 8. However, PPG Industries confirmed that Akzo Nobel has rebuffed the revised proposal as the later felt that the latest offer was not in the interest of its stakeholders and also fails to recognize the value of the company.
On Apr 5, PPG Industries reiterated the invitation to Azko Nobel to enter into discussion for exploring its proposal to form a merged entity. The company said that it continues to believe there is a significant strategic rationale for the proposed transaction and the combination is in the best interest of both companies’ shareholders. The merger would create an enhanced global player in paints, coatings and specialty materials leveraging complementary products, technologies and geographies, offering a vast range of products to a more diverse client base.
Earnings Whispers
Our proven model does not conclusively show that PPG Industries is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) 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 and the Zacks Consensus Estimate are pegged at $1.31. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PPG Industries currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.
Stocks That Warrant a Look
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:
The Chemours Company (CC - Free Report) has an Earnings ESP of +4.08% and a Zacks Rank #1.
The Mosaic Company (MOS - Free Report) has an Earnings ESP of +10% and a Zacks Rank #2.
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Can PPG Industries (PPG) Spring a Surprise in Q1 Earnings?
PPG Industries Inc. (PPG - Free Report) is set to release first-quarter 2017 results ahead of the bell on Apr 20.
In the last quarter, PPG Industries reported adjusted earnings of $1.19 per share, up 1.6% from the year-ago figure of $1.16. The earnings narrowly beat the Zacks Consensus Estimate of $1.18 per share. However, net sales fell by 1.6% year over year to $3,497 million, lower than the Zacks Consensus Estimate of $3,552 million. PPG Industries has surpassed the Zacks Consensus Estimate in three out of four trailing quarters, with an average positive surprise of 0.54%.
Can PPG Industries surprise investors again or is it heading for a possible pullback? 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
Factors at Play
The Chairman and CEO of PPG Industries, Michael H. McGarry, in January, said that the company is operating in an uncertain and evolving regulatory and macroeconomic environment. The company expects improved momentum in overall global economic growth, with gradually improving growth rates in developed regions and continuing but uneven growth in emerging regions.
The company is aggressively administering all factors within internal controls to remain competitive. PPG Industries has recently initiated a new restructuring program which is expected to generate $125 million in annual savings. The company also anticipates deploying additional $2.5–$3.5 billion cash in acquisitions and share repurchases for 2017 and 2018 combined to ensure shareholder value creation.
PPG Industries is seeing strength in the North American automotive market. Organic sales of its automotive re-finished coatings business continue to outperform the market, driven by strong demand for the company’s market-leading waterborne products and favorable industry trends. Further, an aggressive cost cutting and restructuring strategy will act as a positive catalyst for the company.
PPG Industries’ shares rallied around 9% over the past three months, outperforming the Zacks categorized Chemicals-Diversified industry’s 3.1% gain.
Revenues of PPG Industries are expected to improve from increased demand in aerospace, automotive and construction space, but due to cyclical factors there could be some short-term macroeconomic challenges going ahead.
In the industrial coatings business, PPG Industries is seeing some weakness in the heavy-duty equipment market. The protective and marine coatings sales are also getting hurt owing to weakness in the marine new-build market and soft demand in the oil and gas end-use market.
Moreover, unfavorable currency exchange translation, especially in emerging markets, reduced its sales by $400 million in 2016. The company expects the trend to continue and create unfavorable currency impact of $375 - $425 million in its sales and $70 - $90 million on its pre-tax earnings for full-year 2017. The company also expects some margin pressure associated with higher than expected raw materials costs (on a year-over-year basis) in first-quarter 2017.
PPG Industries continued the plan to acquire the Dutch paints maker, Akzo Nobel N.V. (AKZOY - Free Report) , by revising the initial offer. The latest offer would provide a 40% premium to shareholders of Akzo Nobel, based on its closing stock price of €64.42 as on Mar 8. However, PPG Industries confirmed that Akzo Nobel has rebuffed the revised proposal as the later felt that the latest offer was not in the interest of its stakeholders and also fails to recognize the value of the company.
On Apr 5, PPG Industries reiterated the invitation to Azko Nobel to enter into discussion for exploring its proposal to form a merged entity. The company said that it continues to believe there is a significant strategic rationale for the proposed transaction and the combination is in the best interest of both companies’ shareholders. The merger would create an enhanced global player in paints, coatings and specialty materials leveraging complementary products, technologies and geographies, offering a vast range of products to a more diverse client base.
Earnings Whispers
Our proven model does not conclusively show that PPG Industries is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) 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 and the Zacks Consensus Estimate are pegged at $1.31. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PPG Industries currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.
Stocks That Warrant a Look
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:
The Chemours Company (CC - Free Report) has an Earnings ESP of +4.08% and a Zacks Rank #1.
The Mosaic Company (MOS - Free Report) has an Earnings ESP of +10% and a Zacks Rank #2.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>