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PPG Industries (PPG) Soars 4.8%: Is Further Upside Left in the Stock?

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PPG Industries (PPG - Free Report) shares soared 4.8% in the last trading session to close at $140.04. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 2.8% loss over the past four weeks.

Shares of PPG Industries have gained following the announcement that it raised its guidance for the first quarter of 2023, citing higher sales volumes and selling prices. The company expects adjusted earnings per share of $1.52-$1.58, higher than the previously stated $1.10-$1.20. PPG reported adjusted earnings per share of $1.37 in the first quarter of 2022.

PPG stated that it witnessed improvement in year-over-year earnings across most of its business portfolio, including Europe. The better-than-expected sales volume performance was mainly driven by the aerospace and automotive original equipment manufacturer coatings businesses. The quarter’s results also benefitted from strong demand in PPG Comex and a recent customer win in U.S. architectural coatings. Sales volumes were reported to be higher in China due to fewer pandemic disruptions than previously factored in the guidance.

This paint and coatings maker is expected to post quarterly earnings of $1.13 per share in its upcoming report, which represents a year-over-year change of -17.5%. Revenues are expected to be $4.3 billion, down 0.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For PPG Industries, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on PPG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

PPG Industries is a member of the Zacks Chemical - Specialty industry. One other stock in the same industry, Element Solutions (ESI - Free Report) , finished the last trading session 2.4% lower at $18.84. ESI has returned -8.7% over the past month.

Element Solutions' consensus EPS estimate for the upcoming report has changed -8.4% over the past month to $0.28. Compared to the company's year-ago EPS, this represents a change of -26.3%. Element Solutions currently boasts a Zacks Rank of #3 (Hold).


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