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PPG Industries, Inc. (PPG - Free Report) is bullish about the growth in paints and coatings in 2023 as the auto industry and aerospace outperformed in Q1. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 20.2% this year.
PPG was founded in Pennsylvania in 1883. The company is celebrating its 140th year in business this year. It develops and delivers paints, coatings and specialty materials to customers in more than 70 countries. It has customers in the construction, consumer products, industrial and transportation markets and aftermarkets.
PPG Outlines Growth Framework
On May 24, 2023, PPG shared its PPG framework for purposeful, profitable growth for the next 4 years.
It aims to establish annual 2% to 4% organic sales growth. It expects annual adjusted EPS growth of 8% to 12% through 2026.
Additionally, it aims for free cash flow of about $1 billion per year.
Record Q1 Sales
On Apr 20, 2023, PPG reported its first quarter results and blew by the Zacks Consensus, reporting earnings of $1.82 versus the consensus of $1.55. That's a beat of $0.27, or 17.4%.
It was the second beat in a row for PPG.
The company saw record first quarter sales of $4.38 billion, up 2% from $4.308 billion in the prior year due to an 8% rise in selling prices while volumes declined 3%.
Several businesses outperformed the company's original forecast including the aerospace coatings business and the Latin America region, with both delivering record sales. PPG's automotive original equipment manufacturer (OEM) coatings business also was boosted by solid global production growth.
Analysts Getting Bullish Again
PPG will report second quarter results on July 20, 2023. In April, the company believed the macro environment would generally remain consistent with the first quarter with continued stabilization of economic activity at lower levels in Europe and modestly improving demand in China.
In the US, PPG expected sequential slowing in economic activity in certain end-use markets, particularly in those that were construction-related.
It gave full year earnings guidance in the range of $6.95 to $7.25.
But analysts don't seem to think the April forecast is going to be correct. 1 analyst has raised both the 2023 and 2024 earnings estimate in the last week and that has pushed the consensus above the company's guidance range.
The 2023 Zacks Consensus Estimate has jumped to $7.27 from $6.84 just 3 months ago. That's earnings growth of 20.2% over 2022 where the company made $6.05.
Shares Attractively Valued
Shares of PPG are up 16.7% year-to-date which is outperforming the S&P 500 which is up 14.6%.
Image Source: Zacks Investment Research
But it is still attractively valued with a forward P/E of 20 and a PEG ratio of just 1.1. It also has a price-to-sales ratio of just 1.9.
PPG is also shareholder friendly and pays a dividend, yielding 1.7%.
For investors looking for a play on the industrial and chemical side of the economy, PPG Industries should be one on your short list.
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Bull of the Day: PPG Industries (PPG)
PPG Industries, Inc. (PPG - Free Report) is bullish about the growth in paints and coatings in 2023 as the auto industry and aerospace outperformed in Q1. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 20.2% this year.
PPG was founded in Pennsylvania in 1883. The company is celebrating its 140th year in business this year. It develops and delivers paints, coatings and specialty materials to customers in more than 70 countries. It has customers in the construction, consumer products, industrial and transportation markets and aftermarkets.
PPG Outlines Growth Framework
On May 24, 2023, PPG shared its PPG framework for purposeful, profitable growth for the next 4 years.
It aims to establish annual 2% to 4% organic sales growth. It expects annual adjusted EPS growth of 8% to 12% through 2026.
Additionally, it aims for free cash flow of about $1 billion per year.
Record Q1 Sales
On Apr 20, 2023, PPG reported its first quarter results and blew by the Zacks Consensus, reporting earnings of $1.82 versus the consensus of $1.55. That's a beat of $0.27, or 17.4%.
It was the second beat in a row for PPG.
The company saw record first quarter sales of $4.38 billion, up 2% from $4.308 billion in the prior year due to an 8% rise in selling prices while volumes declined 3%.
Several businesses outperformed the company's original forecast including the aerospace coatings business and the Latin America region, with both delivering record sales. PPG's automotive original equipment manufacturer (OEM) coatings business also was boosted by solid global production growth.
Analysts Getting Bullish Again
PPG will report second quarter results on July 20, 2023. In April, the company believed the macro environment would generally remain consistent with the first quarter with continued stabilization of economic activity at lower levels in Europe and modestly improving demand in China.
In the US, PPG expected sequential slowing in economic activity in certain end-use markets, particularly in those that were construction-related.
It gave full year earnings guidance in the range of $6.95 to $7.25.
But analysts don't seem to think the April forecast is going to be correct. 1 analyst has raised both the 2023 and 2024 earnings estimate in the last week and that has pushed the consensus above the company's guidance range.
The 2023 Zacks Consensus Estimate has jumped to $7.27 from $6.84 just 3 months ago. That's earnings growth of 20.2% over 2022 where the company made $6.05.
Shares Attractively Valued
Shares of PPG are up 16.7% year-to-date which is outperforming the S&P 500 which is up 14.6%.
Image Source: Zacks Investment Research
But it is still attractively valued with a forward P/E of 20 and a PEG ratio of just 1.1. It also has a price-to-sales ratio of just 1.9.
PPG is also shareholder friendly and pays a dividend, yielding 1.7%.
For investors looking for a play on the industrial and chemical side of the economy, PPG Industries should be one on your short list.