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PPG Industries (PPG) Up 19% YTD: What's Driving the Stock?
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PPG Industries, Inc.’s (PPG - Free Report) shares have shot up 19.3% year to date, outperforming the industry’s rise of 10%. The company has also topped the S&P 500’s 16.7% rise over the same period.
Image Source: Zacks Investment Research
Let’s dive into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.
What’s Favoring the Stock?
The solid first-quarter performance contributed to the company’s share price gain. PPG Industries recorded adjusted earnings of $1.88 per share, increasing from the year-ago quarter’s $1.31 and 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. Earnings estimates for the second quarter have been stable in the past month.
The continued global economic recovery saw growth in PPG’s sales volumes by around 7% year over year along with higher volumes in every segment over the same period. A rise in the demand for automotive and general industrial coatings, a favorable foreign currency transition, acquisitions and an increase in selling prices have acted as tailwinds. The company expects the overall global coatings demand to continue to be broad-based in many of the end-use markets served.
An aggressive cost-cutting and restructuring strategy has been beneficial for the company, helping it deliver incremental structural cost savings of around $115 million in 2020 and another $35 million in first-quarter 2021. Cost savings from these restructuring efforts will act as a positive catalyst for PPG. It is hopeful of achieving additional restructuring savings of $30 million in the second quarter and $125 million in full-year 2021.
Acquisitions have also been a positive driving force for the company, 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, and Worwag and Tikkurila in the second quarter are anticipated to significantly drive its sales and deliver synergies in the range of $25-$30 million for 2021. The Tikkurila buyout provides the company with a base in many northern and eastern European countries, while the Worwag transaction helps expand its current customer distribution in key geographies.
The company also stands to benefit from a diversified business in terms of products offered and regions served, in turn enabling it to deliver growth to shareholders by mobilizing opportunities in fast-growing regions. It is also dedicated to boosting 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.
Image: Bigstock
PPG Industries (PPG) Up 19% YTD: What's Driving the Stock?
PPG Industries, Inc.’s (PPG - Free Report) shares have shot up 19.3% year to date, outperforming the industry’s rise of 10%. The company has also topped the S&P 500’s 16.7% rise over the same period.
Image Source: Zacks Investment Research
Let’s dive into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.
What’s Favoring the Stock?
The solid first-quarter performance contributed to the company’s share price gain. PPG Industries recorded adjusted earnings of $1.88 per share, increasing from the year-ago quarter’s $1.31 and 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. Earnings estimates for the second quarter have been stable in the past month.
The continued global economic recovery saw growth in PPG’s sales volumes by around 7% year over year along with higher volumes in every segment over the same period. A rise in the demand for automotive and general industrial coatings, a favorable foreign currency transition, acquisitions and an increase in selling prices have acted as tailwinds. The company expects the overall global coatings demand to continue to be broad-based in many of the end-use markets served.
An aggressive cost-cutting and restructuring strategy has been beneficial for the company, helping it deliver incremental structural cost savings of around $115 million in 2020 and another $35 million in first-quarter 2021. Cost savings from these restructuring efforts will act as a positive catalyst for PPG. It is hopeful of achieving additional restructuring savings of $30 million in the second quarter and $125 million in full-year 2021.
Acquisitions have also been a positive driving force for the company, 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, and Worwag and Tikkurila in the second quarter are anticipated to significantly drive its sales and deliver synergies in the range of $25-$30 million for 2021. The Tikkurila buyout provides the company with a base in many northern and eastern European countries, while the Worwag transaction helps expand its current customer distribution in key geographies.
The company also stands to benefit from a diversified business in terms of products offered and regions served, in turn enabling it to deliver growth to shareholders by mobilizing opportunities in fast-growing regions. It is also dedicated to boosting 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 include Orion Engineered Carbons S.A (OEC - Free Report) , Avient Corporation (AVNT - Free Report) and Cabot Corporation (CBT - Free Report) , 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 79.8% for the current year. The company’s shares have surged 77.8% over a year.
Avient has a projected earnings growth rate of 64.2% for the current year. The company’s shares have appreciated 91.2% over a year.
Cabot has a projected earnings growth rate of 137.5% for the current year. The company’s shares have jumped 55.4% over a year.