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PPG Industries (PPG) Stock Up 27% in 3 Months: Here's Why
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PPG Industries, Inc.’s (PPG - Free Report) shares have shot up 26.9% over the past three months, outperforming the industry’s rise of 12.8%. The company has also topped the S&P 500’s 10.2% rise over the same period.
Let’s dive into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.
Image Source: Zacks Investment Research
What’s Favoring the Stock?
An impressive first-quarter performance contributed to the gain in the company shares. PPG Industries’ adjusted earnings of $1.88 per share rose from the year-ago figure of $1.31, topping the Zacks Consensus Estimate of $1.58. Net sales rose roughly 15% year over year to $3,881 million, surpassing the Zacks Consensus Estimate of $3,691.6 million.
Sales volumes were up around 7% year over year on the back of continued global economic recovery. A rise in the demand for automotive and general industrial coatings, a favorable foreign currency transition, acquisitions as well as increase in selling prices backed its growth momentum. The company also saw higher volumes in every segment on a year-over-year basis driven by improved demand. PPG Industries expects overall global coatings demand to continue to be broad based in many of the end-use markets served.
The company has also been reaping benefits from an aggressive cost cutting and restructuring strategy, which helped it deliver incremental structural cost savings of around $115 million in 2020 and another $35 million in first-quarter 2021. It expects to achieve additional restructuring savings of $30 million in the second quarter and $125 million in full-year 2021.
Expansion through acquisitions has been beneficial to the company. This has been adding to its scale of operations and portfolio as well as leading to value creation for its customers. The recent acquisitions of Ennis-Flint in December 2020, Versaflex in first-quarter 2021, Worwag in May 2021 and Tikkurila — to be closed in the second quarter — are anticipated to deliver synergies in the range of $25-$30 million for 2021.
It is also poised to benefit from a diversified business in terms of product offerings and regions, in turn enabling the company to deliver growth to shareholders by harnessing opportunities in fast-growing regions. It also aims to boost shareholder returns. In 2020, the company returned around $500 million to shareholders through dividends. It also paid dividend worth $130 million in the last reported quarter. PPG Industries had roughly $1.5 billion remaining on its current share repurchase authorization at the end of 2020.
Orion has a projected earnings growth rate of 61.5% for the current year. The company’s shares have surged 60.9% over a year.
Tronox has a projected earnings growth rate of 242.9% for the current year. The company’s shares have appreciated 181.8% over a year.
Univar has a projected earnings growth rate of 35.2% for the current year. The company’s shares have jumped 55.8 over a year.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
PPG Industries (PPG) Stock Up 27% in 3 Months: Here's Why
PPG Industries, Inc.’s (PPG - Free Report) shares have shot up 26.9% over the past three months, outperforming the industry’s rise of 12.8%. The company has also topped the S&P 500’s 10.2% rise over the same period.
Let’s dive into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.
What’s Favoring the Stock?
An impressive first-quarter performance contributed to the gain in the company shares. PPG Industries’ adjusted earnings of $1.88 per share rose from the year-ago figure of $1.31, topping the Zacks Consensus Estimate of $1.58. Net sales rose roughly 15% year over year to $3,881 million, surpassing the Zacks Consensus Estimate of $3,691.6 million.
Sales volumes were up around 7% year over year on the back of continued global economic recovery. A rise in the demand for automotive and general industrial coatings, a favorable foreign currency transition, acquisitions as well as increase in selling prices backed its growth momentum. The company also saw higher volumes in every segment on a year-over-year basis driven by improved demand. PPG Industries expects overall global coatings demand to continue to be broad based in many of the end-use markets served.
The company has also been reaping benefits from an aggressive cost cutting and restructuring strategy, which helped it deliver incremental structural cost savings of around $115 million in 2020 and another $35 million in first-quarter 2021. It expects to achieve additional restructuring savings of $30 million in the second quarter and $125 million in full-year 2021.
Expansion through acquisitions has been beneficial to the company. This has been adding to its scale of operations and portfolio as well as leading to value creation for its customers. The recent acquisitions of Ennis-Flint in December 2020, Versaflex in first-quarter 2021, Worwag in May 2021 and Tikkurila — to be closed in the second quarter — are anticipated to deliver synergies in the range of $25-$30 million for 2021.
It is also poised to benefit from a diversified business in terms of product offerings and regions, in turn enabling the company to deliver growth to shareholders by harnessing opportunities in fast-growing regions. It also aims to boost shareholder returns. In 2020, the company returned around $500 million to shareholders through dividends. It also paid dividend worth $130 million in the last reported quarter. PPG Industries had roughly $1.5 billion remaining on its current share repurchase authorization at the end of 2020.
PPG Industries, Inc. Price and Consensus
PPG Industries, Inc. price-consensus-chart | PPG Industries, Inc. Quote
Other Stocks to Consider
Other top-ranked stocks in the basic materials space include Orion Engineered Carbons S.A (OEC - Free Report) , Tronox Holdings PLC (TROX - Free Report) and Univar Solutions Inc. , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Orion has a projected earnings growth rate of 61.5% for the current year. The company’s shares have surged 60.9% over a year.
Tronox has a projected earnings growth rate of 242.9% for the current year. The company’s shares have appreciated 181.8% over a year.
Univar has a projected earnings growth rate of 35.2% for the current year. The company’s shares have jumped 55.8 over a year.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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