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PPG Industries (PPG) to Post Q1 Earnings: What's in the Offing?

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PPG Industries Inc. (PPG - Free Report) is set to release first-quarter 2022 results after the closing bell on Apr 21. The paint giant’s performance will likely reflect the benefits of acquisitions, cost-cutting and restructuring actions. However, it is likely to have faced headwinds from raw material inflation and supply chain disruptions.

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 5.5%, on average. The company reported an earnings surprise of around 5.9% in the last reported quarter.

Shares of the company have declined 25.1% in the past year compared with a 0.2% fall of the industry.

Zacks Investment Research
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 pegged at $4,238 million, suggesting a year-over-year rise of 9.2%.

The Zacks Consensus Estimate for revenues in the Industrial Coatings unit is currently pegged at $1,698 million, calling for an increase of around 8.7% year over year. The consensus mark for revenues in the Performance Coatings segment is pegged at $2,575 million, indicating about an 11% year-over-year rise.

Factors at Play

The company’s first-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. The company is also expected to have benefited from its actions to raise selling prices.

The company is also undertaking measures to grow business inorganically through value-creating acquisitions. Contributions from the acquisitions are expected to get reflected in its March-quarter performance. PPG Industries expects Tikkurila, Worwag, Cetelon and Versaflex to contribute to first-quarter sales.

PPG Industries is expected to have faced headwinds from raw material and logistics cost inflation in the first quarter. The company expects raw material costs to be up around 25-30% year over year across its segments in the first quarter. It is also expected to have faced elevated logistics and labor costs in the quarter.

The company’s first-quarter performance is likely to have been affected by supply chain disruptions. This is expected to impact its ability to manufacture and deliver products. The company expects that the business will be soft in China in the first quarter due to severe operating restrictions recently imposed due to the pandemic and during the Winter Olympics. This along with the spread of the Omicron variant globally is expected to have dented the company’s results in the first quarter. The company sees total net sales volumes to be down a mid-single-digit percentage on a year-over-year basis in the first quarter.

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 0.00%. The Zacks Consensus Estimate for earnings is currently pegged at $1.13. 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 EPS Surprise

 

PPG Industries, Inc. Price and EPS Surprise

PPG Industries, Inc. price-eps-surprise | 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:

Ashland Global Holdings Inc. (ASH - Free Report) , scheduled to release earnings on Apr 26, has an Earnings ESP of +13.64% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ashland's first-quarter earnings has been revised 10.9% upward in the past 60 days. The consensus estimate for ASH’s earnings for the quarter is currently pegged at $1.32.

Huntsman Corporation (HUN - Free Report) , slated to release earnings on Apr 28, has an Earnings ESP of +0.56% and carries a Zacks Rank #3.

The consensus estimate for Huntsman’s first-quarter earnings has been revised 17.6% upward in the past 60 days. The Zacks Consensus Estimate for HUN’s earnings for the quarter is pegged at $1.

Celanese Corporation (CE - Free Report) , scheduled to release earnings on Apr 28, has an Earnings ESP of +0.97% and carries a Zacks Rank #3.

The Zacks Consensus Estimate for Celanese's first-quarter earnings has been revised 0.6% upward in the past 60 days. The consensus estimate for CE’s earnings for the quarter is currently pegged at $4.48.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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