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PPG Industries (PPG) to Report Q3 Earnings: What's in Store?
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PPG Industries Inc. (PPG - Free Report) is set to release third-quarter 2021 results after the closing bell on Oct 20. The paint giant’s results will likely reflect the benefits of strong global architectural coatings business as well as cost-cutting and restructuring actions. However, it is likely to have faced headwind from raw material inflation.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of around 2.3%, on average. The company reported a negative earnings surprise of around 11.4% in the last reported quarter.
Shares of the company have rallied 19.3% in the past year compared with a 22.8% rise of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for PPG Industries’ revenues in the to-be-reported quarter is at $4,241 million, suggesting a year-over-year rise of 15.1%.
The Zacks Consensus Estimate for revenues in the Industrial Coatings unit is currently pegged at $1,582 million, calling for an increase of around 10.3% year over year. The consensus mark for revenues in the Performance Coatings segment is pegged at $2,659 million, indicating about 18.1% year-over-year rise.
Factors at Play
The company’s third-quarter performance is expected to have benefited from cost-cutting and restructuring measures. PPG Industries announced significant restructuring actions, focusing on regions and end-use markets with the weakest business conditions. It expects roughly $30 million in cost savings from restructuring programs in the third quarter. The company is also expected to have benefited from its actions to raise selling prices.
The company is also undertaking steps to grow business inorganically through value-creating acquisitions. The company expects all acquisitions completed since December 2020 to contribute around $500 million in incremental sales in the third quarter.
The company is likely to have witnessed consistent strength in its global architectural coatings business in the quarter to be reported.
However, PPG Industries is expected to have faced headwinds from raw material and logistics cost inflation in the third quarter. The company, last month, stated that raw material inflation for the third quarter is higher by $60 million to $70 million than the previously-announced figures. The supply disruptions in coatings commodity have worsened since the company’s second-quarter earnings announcement due to additional unforeseen declarations and lower material allocations from certain suppliers.
The company’s third-quarter sales volumes are likely to have been affected by disruptions in commodity supplies, continued reductions in customer production mainly due to shortages in semiconductor chips as well as logistics and transportation challenges in many regions including the United States, Europe and China.
Zacks Model
Our proven model does not conclusively predict an earnings beat for PPG Industries this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for PPG Industries is +7.81%. The Zacks Consensus Estimate for earnings is currently pegged at $1.56. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PPG Industries currently carries a Zacks Rank #4 (Sell).
Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Image: Bigstock
PPG Industries (PPG) to Report Q3 Earnings: What's in Store?
PPG Industries Inc. (PPG - Free Report) is set to release third-quarter 2021 results after the closing bell on Oct 20. The paint giant’s results will likely reflect the benefits of strong global architectural coatings business as well as cost-cutting and restructuring actions. However, it is likely to have faced headwind from raw material inflation.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of around 2.3%, on average. The company reported a negative earnings surprise of around 11.4% in the last reported quarter.
Shares of the company have rallied 19.3% in the past year compared with a 22.8% rise of the industry.
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for PPG Industries’ revenues in the to-be-reported quarter is at $4,241 million, suggesting a year-over-year rise of 15.1%.
The Zacks Consensus Estimate for revenues in the Industrial Coatings unit is currently pegged at $1,582 million, calling for an increase of around 10.3% year over year. The consensus mark for revenues in the Performance Coatings segment is pegged at $2,659 million, indicating about 18.1% year-over-year rise.
Factors at Play
The company’s third-quarter performance is expected to have benefited from cost-cutting and restructuring measures. PPG Industries announced significant restructuring actions, focusing on regions and end-use markets with the weakest business conditions. It expects roughly $30 million in cost savings from restructuring programs in the third quarter. The company is also expected to have benefited from its actions to raise selling prices.
The company is also undertaking steps to grow business inorganically through value-creating acquisitions. The company expects all acquisitions completed since December 2020 to contribute around $500 million in incremental sales in the third quarter.
The company is likely to have witnessed consistent strength in its global architectural coatings business in the quarter to be reported.
However, PPG Industries is expected to have faced headwinds from raw material and logistics cost inflation in the third quarter. The company, last month, stated that raw material inflation for the third quarter is higher by $60 million to $70 million than the previously-announced figures. The supply disruptions in coatings commodity have worsened since the company’s second-quarter earnings announcement due to additional unforeseen declarations and lower material allocations from certain suppliers.
The company’s third-quarter sales volumes are likely to have been affected by disruptions in commodity supplies, continued reductions in customer production mainly due to shortages in semiconductor chips as well as logistics and transportation challenges in many regions including the United States, Europe and China.
Zacks Model
Our proven model does not conclusively predict an earnings beat for PPG Industries this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for PPG Industries is +7.81%. The Zacks Consensus Estimate for earnings is currently pegged at $1.56. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PPG Industries currently carries a Zacks Rank #4 (Sell).
PPG Industries, Inc. Price and Consensus
PPG Industries, Inc. price-consensus-chart | PPG Industries, Inc. Quote
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Olin Corporation (OLN - Free Report) , scheduled to release earnings on Oct 21, has an Earnings ESP of +7.45% and sports a Zacks Rank #1.You can see the complete list of today’s Zacks #1 Rank stocks here.
Cleveland-Cliffs Inc. (CLF - Free Report) , scheduled to release earnings on Oct 22, has an Earnings ESP of +0.45% and carries a Zacks Rank #2.
Albemarle Corporation (ALB - Free Report) , scheduled to release earnings on Nov 3, has an Earnings ESP of +8.05% and carries a Zacks Rank #3.