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PPG Industries (PPG) to Post Q2 Earnings: What's in the Offing?
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PPG Industries Inc. (PPG - Free Report) is set to release second-quarter 2022 results after the closing bell on Jul 21. The paint giant’s performance will likely reflect the benefits of acquisitions, cost-cutting and restructuring actions. However, it is expected 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 6.3%, on average. The company reported an earnings surprise of around 22.3% in the last reported quarter.
Shares of the company have declined 27.5% in the past year compared with a 14% fall 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 pegged at $4,766 million, suggesting a year-over-year rise of 9.3%.
The Zacks Consensus Estimate for revenues in the Industrial Coatings unit is currently pegged at $1,755 million, calling for an increase of around 9% year over year. The consensus mark for revenues in the Performance Coatings segment is pegged at $2,985 million, indicating about an 8.6% year-over-year rise.
Factors at Play
The company’s second-quarter performance is expected to have benefited from cost-cutting and restructuring measures. PPG Industries is executing 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 efforts 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 June-quarter performance. Tikkurila, Worwag, Cetelon and Arsonsisi buyouts are likely to have contributed to second-quarter sales.
However, PPG Industries is expected to have faced headwinds from raw material and logistics cost inflation in the second quarter. The company expects raw material costs inflation of high-teen-percentage across its segments in the second quarter. It also expects elevated logistics costs and energy costs in the quarter.
The company’s second-quarter performance is expected to have been affected by tightened supply and pandemic-related disruptions, which are expected to have continued in the quarter. This is expected to have impacted its ability to manufacture and deliver products. It sees total net sales volumes to be down a low-to-mid-single-digit percentage on a year-over-year basis in the second quarter. Geopolitical issues in Europe (stemming from the Russia-Ukraine conflict) and pandemic-related restrictions in China are likely to have affected volumes.
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 -0.47%. The Zacks Consensus Estimate for earnings is currently pegged at $1.78. 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:
The Zacks Consensus Estimate for Albemarle’s second-quarter earnings has been revised 18% upward in the past 60 days. The consensus estimate for ALB’s earnings for the quarter is currently pegged at $2.80.
Cabot Corporation (CBT - Free Report) , slated to release earnings on Aug 8, has an Earnings ESP of +0.16% and sports a Zacks Rank #1.
The consensus estimate for Cabot’s fiscal third-quarter earnings has been revised 6% upward in the past 60 days. The Zacks Consensus Estimate for CBT’s earnings for the quarter is pegged at $1.53.
Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) , scheduled to release earnings on Aug 17, has an Earnings ESP of +9.24% and sports a Zacks Rank #1.
The Zacks Consensus Estimate for Sociedad's second-quarter earnings has been revised 75.3% upward in the past 60 days. The consensus estimate for SQM’s earnings for the quarter is currently pegged at $3.11.
Image: Bigstock
PPG Industries (PPG) to Post Q2 Earnings: What's in the Offing?
PPG Industries Inc. (PPG - Free Report) is set to release second-quarter 2022 results after the closing bell on Jul 21. The paint giant’s performance will likely reflect the benefits of acquisitions, cost-cutting and restructuring actions. However, it is expected 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 6.3%, on average. The company reported an earnings surprise of around 22.3% in the last reported quarter.
Shares of the company have declined 27.5% in the past year compared with a 14% fall 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 pegged at $4,766 million, suggesting a year-over-year rise of 9.3%.
The Zacks Consensus Estimate for revenues in the Industrial Coatings unit is currently pegged at $1,755 million, calling for an increase of around 9% year over year. The consensus mark for revenues in the Performance Coatings segment is pegged at $2,985 million, indicating about an 8.6% year-over-year rise.
Factors at Play
The company’s second-quarter performance is expected to have benefited from cost-cutting and restructuring measures. PPG Industries is executing 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 efforts 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 June-quarter performance. Tikkurila, Worwag, Cetelon and Arsonsisi buyouts are likely to have contributed to second-quarter sales.
However, PPG Industries is expected to have faced headwinds from raw material and logistics cost inflation in the second quarter. The company expects raw material costs inflation of high-teen-percentage across its segments in the second quarter. It also expects elevated logistics costs and energy costs in the quarter.
The company’s second-quarter performance is expected to have been affected by tightened supply and pandemic-related disruptions, which are expected to have continued in the quarter. This is expected to have impacted its ability to manufacture and deliver products. It sees total net sales volumes to be down a low-to-mid-single-digit percentage on a year-over-year basis in the second quarter. Geopolitical issues in Europe (stemming from the Russia-Ukraine conflict) and pandemic-related restrictions in China are likely to have affected volumes.
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 -0.47%. The Zacks Consensus Estimate for earnings is currently pegged at $1.78. 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-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:
Albemarle Corporation (ALB - Free Report) , scheduled to release earnings on Aug 3, has an Earnings ESP of +17.01% 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 Albemarle’s second-quarter earnings has been revised 18% upward in the past 60 days. The consensus estimate for ALB’s earnings for the quarter is currently pegged at $2.80.
Cabot Corporation (CBT - Free Report) , slated to release earnings on Aug 8, has an Earnings ESP of +0.16% and sports a Zacks Rank #1.
The consensus estimate for Cabot’s fiscal third-quarter earnings has been revised 6% upward in the past 60 days. The Zacks Consensus Estimate for CBT’s earnings for the quarter is pegged at $1.53.
Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) , scheduled to release earnings on Aug 17, has an Earnings ESP of +9.24% and sports a Zacks Rank #1.
The Zacks Consensus Estimate for Sociedad's second-quarter earnings has been revised 75.3% upward in the past 60 days. The consensus estimate for SQM’s earnings for the quarter is currently pegged at $3.11.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.