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Over the past year, the stock has gained 8.2% against the 4.9% decline of the industry.
Image Source: Zacks Investment Research
What’s Driving PPG?
PPG is implementing a cost-cutting and restructuring strategy, as well as optimizing its working capital requirements. The cost savings generated by these restructuring initiatives will act as a tailwind for the company. PPG Industries has undertaken extensive restructuring efforts to reduce its cost structure, primarily focusing on regions and end-use markets with weak business conditions. The company's restructuring savings in 2022 were around $65 million. It anticipates $12 million in incremental restructuring savings in the first quarter of 2023. PPG also reduced its working capital requirements in the fourth quarter by decreasing inventory levels sequentially.
PPG Industries is on track to raise selling prices across its business segments to offset the impact of rising raw material costs. The company intends to completely recover the cost inflation experienced since 2021, with continued price hikes beginning in 2023. This is likely to strengthen its margins in 2023.
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 performance in 2023. Buyouts, including Tikkurila, Worwag and Cetelon, are likely to contribute to its top line this year.
PPG Industries also aims to boost shareholder returns with cash deployment. It has an impressive record of returning cash to shareholders through dividends and share buybacks. In 2022, the company returned around $570 million to shareholders through dividends and about $190 million through share repurchases.
The company recently raised its earnings guidance for the first quarter of 2023, factoring in higher volumes and prices. PPG said that it witnessed an increased pace of recovery in its operating margin during the first quarter, owing to higher sales volumes and selling prices. Sales volume surpassed expectations, with major contributions from the company's aerospace and automotive original equipment manufacturer coatings businesses.
PPG Industries also reported higher earnings than the previous year in majority of its business portfolio, including Europe. The company reported higher-than-expected demand in PPG Comex and U.S. architectural coatings, which was attributed to a recent customer gain that boosted its quarterly performance. Furthermore, due to fewer distortions caused by the pandemic, sales volumes in China exceeded earlier projections.
Some other top-ranked stocks in the Basic Materials space are Linde plc (LIN - Free Report) , Axalta Coating SystemsLtd. (AXTA - Free Report) and Reliance Steel & AluminumCo. (RS - Free Report)
Linde, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 8.1% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 0.65% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 5.9%, on average. The stock has gained 14.1% over the past year.
Axalta, currently carrying a Zacks Rank #2, has surged 21.3% over the past year. The Zacks Consensus Estimate for its current-year earnings has been stable in the past 60 days. Axalta’s earnings beat the Zacks Consensus Estimate in all the last four quarters. It has a trailing four-quarter earnings surprise of 32.4%, on average.
Reliance Steel currently sports a Zacks Rank #1. Its earnings surpassed the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 13.4%, on average. The stock has rallied 35.2% over the past year.
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PPG Industries (PPG) Hits 52-Week High: What's Aiding it?
Shares of PPG Industries, Inc. (PPG - Free Report) scaled a new 52-week high of $141.26 on Apr 11, before closing the session at $139.30.
It sports a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks Rank #1 stocks here.
Over the past year, the stock has gained 8.2% against the 4.9% decline of the industry.
Image Source: Zacks Investment Research
What’s Driving PPG?
PPG is implementing a cost-cutting and restructuring strategy, as well as optimizing its working capital requirements. The cost savings generated by these restructuring initiatives will act as a tailwind for the company. PPG Industries has undertaken extensive restructuring efforts to reduce its cost structure, primarily focusing on regions and end-use markets with weak business conditions. The company's restructuring savings in 2022 were around $65 million. It anticipates $12 million in incremental restructuring savings in the first quarter of 2023. PPG also reduced its working capital requirements in the fourth quarter by decreasing inventory levels sequentially.
PPG Industries is on track to raise selling prices across its business segments to offset the impact of rising raw material costs. The company intends to completely recover the cost inflation experienced since 2021, with continued price hikes beginning in 2023. This is likely to strengthen its margins in 2023.
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 performance in 2023. Buyouts, including Tikkurila, Worwag and Cetelon, are likely to contribute to its top line this year.
PPG Industries also aims to boost shareholder returns with cash deployment. It has an impressive record of returning cash to shareholders through dividends and share buybacks. In 2022, the company returned around $570 million to shareholders through dividends and about $190 million through share repurchases.
The company recently raised its earnings guidance for the first quarter of 2023, factoring in higher volumes and prices. PPG said that it witnessed an increased pace of recovery in its operating margin during the first quarter, owing to higher sales volumes and selling prices. Sales volume surpassed expectations, with major contributions from the company's aerospace and automotive original equipment manufacturer coatings businesses.
PPG Industries also reported higher earnings than the previous year in majority of its business portfolio, including Europe. The company reported higher-than-expected demand in PPG Comex and U.S. architectural coatings, which was attributed to a recent customer gain that boosted its quarterly performance. Furthermore, due to fewer distortions caused by the pandemic, sales volumes in China exceeded earlier projections.
PPG Industries, Inc. Price and Consensus
PPG Industries, Inc. price-consensus-chart | PPG Industries, Inc. Quote
Other Stocks to Consider
Some other top-ranked stocks in the Basic Materials space are Linde plc (LIN - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and Reliance Steel & Aluminum Co. (RS - Free Report)
Linde, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 8.1% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 0.65% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 5.9%, on average. The stock has gained 14.1% over the past year.
Axalta, currently carrying a Zacks Rank #2, has surged 21.3% over the past year. The Zacks Consensus Estimate for its current-year earnings has been stable in the past 60 days. Axalta’s earnings beat the Zacks Consensus Estimate in all the last four quarters. It has a trailing four-quarter earnings surprise of 32.4%, on average.
Reliance Steel currently sports a Zacks Rank #1. Its earnings surpassed the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 13.4%, on average. The stock has rallied 35.2% over the past year.