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Why You Should Add PPG Industries (PPG) to Your Portfolio
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PPG Industries, Inc. (PPG - Free Report) looks promising at the moment. It is benefiting from its cost-saving actions, acquisitions and strong global demand for architectural coatings.
We are positive about the company’s prospects and believe that the time is right to add the stock to one’s portfolio, as it is poised to maintain the momentum.
Let’s take a look at the factors that make this Zacks Rank #2 (Buy) stock an attractive choice for investors right now.
Price Performance
Shares of PPG have soared 57.4% over the past year compared with the 42.3% rise for the industry. It has also outperformed the S&P 500’s 38% growth over the same period.
Image Source: Zacks Investment Research
Upward Estimate Revisions
Earnings estimate revisions have the greatest impact on stock prices. Over the past three months, the Zacks Consensus Estimate for earnings of PPG for the current year has increased around 8.2%. The consensus mark for 2022 earnings has also been revised 6.4% upward over the same timeframe.
Impressive Earnings Surprise History
PPG has outpaced the Zacks Consensus Estimate in all of the the trailing four quarters. In this period, it has delivered an earnings surprise of 18.3%, on average.
Superior Return on Equity (ROE)
ROE is the measure of a company’s efficiency in utilizing shareholder funds. ROE for the trailing 12 months of PPG is 27.5%, higher than the industry’s level of 11.3%.
Upbeat Prospects
PPG is seeing a demand revival on the back of global economic recovery. It is gaining from increased demand for automotive and general industrial coatings, as well as higher selling prices. Its sales volumes were up around 7% year over year and volumes in every segment increased on a year-over-year basis in the first quarter, driven by improved demand. The company 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.
Moreover, expansion through acquisitions has been beneficial to the company. This has been adding to its scale of operations and portfolio and 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 last month 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 out dividends worth $130 million in the last reported quarter. PPG Industries had roughly $1.5 billion remaining under its current share repurchase authorization at the end of 2020.
Cabot has a projected earnings growth rate of 125.9% for the current year. The company’s shares have soared around 53.4% in a year.
Avient has a projected earnings growth rate of 64.1% for the current year. The company’s shares have jumped nearly 81.8% in a year.
Univar has a projected earnings growth rate of 35.2% for the current year. The company’s shares have gained 36.8% in a year.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
Why You Should Add PPG Industries (PPG) to Your Portfolio
PPG Industries, Inc. (PPG - Free Report) looks promising at the moment. It is benefiting from its cost-saving actions, acquisitions and strong global demand for architectural coatings.
We are positive about the company’s prospects and believe that the time is right to add the stock to one’s portfolio, as it is poised to maintain the momentum.
Let’s take a look at the factors that make this Zacks Rank #2 (Buy) stock an attractive choice for investors right now.
Price Performance
Shares of PPG have soared 57.4% over the past year compared with the 42.3% rise for the industry. It has also outperformed the S&P 500’s 38% growth over the same period.
Image Source: Zacks Investment Research
Upward Estimate Revisions
Earnings estimate revisions have the greatest impact on stock prices. Over the past three months, the Zacks Consensus Estimate for earnings of PPG for the current year has increased around 8.2%. The consensus mark for 2022 earnings has also been revised 6.4% upward over the same timeframe.
Impressive Earnings Surprise History
PPG has outpaced the Zacks Consensus Estimate in all of the the trailing four quarters. In this period, it has delivered an earnings surprise of 18.3%, on average.
Superior Return on Equity (ROE)
ROE is the measure of a company’s efficiency in utilizing shareholder funds. ROE for the trailing 12 months of PPG is 27.5%, higher than the industry’s level of 11.3%.
Upbeat Prospects
PPG is seeing a demand revival on the back of global economic recovery. It is gaining from increased demand for automotive and general industrial coatings, as well as higher selling prices. Its sales volumes were up around 7% year over year and volumes in every segment increased on a year-over-year basis in the first quarter, driven by improved demand. The company 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.
Moreover, expansion through acquisitions has been beneficial to the company. This has been adding to its scale of operations and portfolio and 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 last month 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 out dividends worth $130 million in the last reported quarter. PPG Industries had roughly $1.5 billion remaining under 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 are Cabot Corporation (CBT - Free Report) , Avient Corporation (AVNT - 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.
Cabot has a projected earnings growth rate of 125.9% for the current year. The company’s shares have soared around 53.4% in a year.
Avient has a projected earnings growth rate of 64.1% for the current year. The company’s shares have jumped nearly 81.8% in a year.
Univar has a projected earnings growth rate of 35.2% for the current year. The company’s shares have gained 36.8% in a year.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>