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Why Is PPG Industries (PPG) Up 9.3% Since Last Earnings Report?
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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 9.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
PPG Industries' Earnings & Sales Lag Estimates in Q1
PPG Industries recorded net income of $243 million or $1.02 per share in first-quarter 2020, down from the year-ago quarter’s profit of $312 million or $1.31 per share.
Barring one-time items, adjusted earnings were $1.19 per share in the reported quarter, down 13.8% from $1.38 logged in the year-ago quarter. Moreover, the figure lagged the Zacks Consensus Estimate of $1.20.
Net sales were down 6.8% year over year to $3,377 million. The figure lagged the Zacks Consensus Estimate of $3,453 million. Unfavorable currency swings affected net sales by more than 2%. Sales volumes fell 8% year over year.
Segment Highlights
Performance Coatings: Net sales in the segment amounted to roughly $2 billion in the first quarter, down 4.7% year over year. Sales volume in the segment declined around 6%. Unfavorable foreign currency translation lowered net sales by 2%.
Segment income declined 8.4% year over year to $272 million. Reduced sales volume associated with the coronavirus pandemic and unfavorable foreign currency translation were partly offset by higher selling prices, cost mitigation measures and restructuring initiatives.
Industrial Coatings: Sales in the segment totaled around $1.4 billion, down 9.7% from the prior-year quarter’s figure. The benefits of slightly higher selling prices were offset by an 11% decline in sales volume. Also, unfavorable foreign currency translation lowered sales by around 2% on a year-over-year basis.
Net income in the segment totaled $181 million, down 16.9% year over year. Reduced sales volume due to customer shutdowns associated with the coronavirus pandemic were partly offset by modestly higher selling prices, cost mitigation measures and restructuring cost savings. Unfavorable currency impact was roughly $5 million.
Financial Position
As of Mar 31, 2020, PPG Industries had cash and cash equivalents of $1,886 million, up 140.5% year over year. Long-term debt (excluding current portion) rose 2.7% year over year to $4,751 million.
Outlook
Going forward, the company expects to achieve higher restructuring savings of $80-$90 million for 2020.
PPG Industries expects total sales volume for the second quarter to be down 30-35%. Moreover, it anticipates corporate expenses of $45-$50 million and net interest expenses of $35-$40 million for the second quarter.
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 -53.71% due to these changes.
VGM Scores
At this time, PPG Industries has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is PPG Industries (PPG) Up 9.3% Since Last Earnings Report?
It has been about a month since the last earnings report for PPG Industries (PPG - Free Report) . Shares have added about 9.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
PPG Industries' Earnings & Sales Lag Estimates in Q1
PPG Industries recorded net income of $243 million or $1.02 per share in first-quarter 2020, down from the year-ago quarter’s profit of $312 million or $1.31 per share.
Barring one-time items, adjusted earnings were $1.19 per share in the reported quarter, down 13.8% from $1.38 logged in the year-ago quarter. Moreover, the figure lagged the Zacks Consensus Estimate of $1.20.
Net sales were down 6.8% year over year to $3,377 million. The figure lagged the Zacks Consensus Estimate of $3,453 million. Unfavorable currency swings affected net sales by more than 2%. Sales volumes fell 8% year over year.
Segment Highlights
Performance Coatings: Net sales in the segment amounted to roughly $2 billion in the first quarter, down 4.7% year over year. Sales volume in the segment declined around 6%. Unfavorable foreign currency translation lowered net sales by 2%.
Segment income declined 8.4% year over year to $272 million. Reduced sales volume associated with the coronavirus pandemic and unfavorable foreign currency translation were partly offset by higher selling prices, cost mitigation measures and restructuring initiatives.
Industrial Coatings: Sales in the segment totaled around $1.4 billion, down 9.7% from the prior-year quarter’s figure. The benefits of slightly higher selling prices were offset by an 11% decline in sales volume. Also, unfavorable foreign currency translation lowered sales by around 2% on a year-over-year basis.
Net income in the segment totaled $181 million, down 16.9% year over year. Reduced sales volume due to customer shutdowns associated with the coronavirus pandemic were partly offset by modestly higher selling prices, cost mitigation measures and restructuring cost savings. Unfavorable currency impact was roughly $5 million.
Financial Position
As of Mar 31, 2020, PPG Industries had cash and cash equivalents of $1,886 million, up 140.5% year over year. Long-term debt (excluding current portion) rose 2.7% year over year to $4,751 million.
Outlook
Going forward, the company expects to achieve higher restructuring savings of $80-$90 million for 2020.
PPG Industries expects total sales volume for the second quarter to be down 30-35%. Moreover, it anticipates corporate expenses of $45-$50 million and net interest expenses of $35-$40 million for the second quarter.
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 -53.71% due to these changes.
VGM Scores
At this time, PPG Industries has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 #5 (Strong Sell). We expect a below average return from the stock in the next few months.