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PPG Industries, Inc., (PPG - Free Report) shares touched a fresh 52-week high of $149.01 on June 30, before closing at $148.30.
In the past year, PPG has gained 25.8% compared with the industry’s 15.5% rise in the same period.
Image Source: Zacks Investment Research
Strategic Actions, Acquisitions Drive PPG
PPG Industries is benefiting from several factors that include higher pricing across its segments, improved manufacturing efficiencies, cost discipline and strategic acquisitions. However, the company is also facing challenges due to weak demand in Europe and China.
To address these challenges, PPG implemented a cost-cutting and restructuring strategy and optimized its working capital requirements. The company's restructuring initiatives are expected to generate significant cost savings, which will positively impact its financial performance. In the second quarter of 2023, the company anticipates incremental restructuring savings of $10-$15 million.
To mitigate the impact of cost inflation in raw materials, energy and logistics, the company has been raising selling prices across its business segments. This pricing growth and improved manufacturing efficiencies and cost discipline, contributed to a significant increase in profits in the first quarter. The company expects these pricing measures to continue supporting its margins throughout the remainder of 2023.
PPG is actively pursuing inorganic growth through value-creating acquisitions. Acquisitions such as Tikkurila, Worwag and Cetelon are expected to contribute to the company's top line in 2023.
The company is committed to enhancing shareholder returns. In 2022, the company returned approximately $570 million to shareholders through dividends and $190 million through share repurchases. In the first quarter alone, dividends worth around $145 million were paid out.
Estimates Going Up
In the last three months, the company witnessed a significant upward trend in its earnings estimates. The Zacks Consensus Estimate for the company's second-quarter EPS surged by approximately 31%, reflecting the growing optimism about its performance. The 2023 outlook for PPG Industries has also improved, with estimates being revised upward by around 12%. The consensus estimate for current-year earnings is pegged at $7.25, indicating a year-over-year growth of 19.8%.
The Zacks Consensus Estimate for L.B. Foster’s current-year earnings is pegged at 53 cents per share, indicating a year-over-year growth of 112.5%. The company’s shares have gained around 11.5% in the past year. FSTR beat the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 140.5%, on average.
Kopperscurrently carries a Zacks Rank #2.The consensus estimate for current-year earnings for KOP is currently pegged at $4.40, suggesting a year-over-year growth of 6.3%. Koppers’shares have rallied roughly 49.6% in the past year.
The Zacks Consensus Estimate for Linde’s current-year earnings has been revised 4.4% upward in the past 60 days. LIN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 6.9%. The company’s shares have gained 33.5% in the past year.
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PPG Industries (PPG) Hits 52-Week High: What's Aiding It?
PPG Industries, Inc., (PPG - Free Report) shares touched a fresh 52-week high of $149.01 on June 30, before closing at $148.30.
In the past year, PPG has gained 25.8% compared with the industry’s 15.5% rise in the same period.
Image Source: Zacks Investment Research
Strategic Actions, Acquisitions Drive PPG
PPG Industries is benefiting from several factors that include higher pricing across its segments, improved manufacturing efficiencies, cost discipline and strategic acquisitions. However, the company is also facing challenges due to weak demand in Europe and China.
To address these challenges, PPG implemented a cost-cutting and restructuring strategy and optimized its working capital requirements. The company's restructuring initiatives are expected to generate significant cost savings, which will positively impact its financial performance. In the second quarter of 2023, the company anticipates incremental restructuring savings of $10-$15 million.
To mitigate the impact of cost inflation in raw materials, energy and logistics, the company has been raising selling prices across its business segments. This pricing growth and improved manufacturing efficiencies and cost discipline, contributed to a significant increase in profits in the first quarter. The company expects these pricing measures to continue supporting its margins throughout the remainder of 2023.
PPG is actively pursuing inorganic growth through value-creating acquisitions. Acquisitions such as Tikkurila, Worwag and Cetelon are expected to contribute to the company's top line in 2023.
The company is committed to enhancing shareholder returns. In 2022, the company returned approximately $570 million to shareholders through dividends and $190 million through share repurchases. In the first quarter alone, dividends worth around $145 million were paid out.
Estimates Going Up
In the last three months, the company witnessed a significant upward trend in its earnings estimates. The Zacks Consensus Estimate for the company's second-quarter EPS surged by approximately 31%, reflecting the growing optimism about its performance. The 2023 outlook for PPG Industries has also improved, with estimates being revised upward by around 12%. The consensus estimate for current-year earnings is pegged at $7.25, indicating a year-over-year growth of 19.8%.
PPG Industries, Inc. Price and Consensus
PPG Industries, Inc. price-consensus-chart | PPG Industries, Inc. Quote
Zacks Rank & Key Picks
PPG Industries currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include L.B. Foster Company (FSTR - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Koppers Holdings Inc. (KOP - Free Report) and Linde Plc (LIN - Free Report) , carrying a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for L.B. Foster’s current-year earnings is pegged at 53 cents per share, indicating a year-over-year growth of 112.5%. The company’s shares have gained around 11.5% in the past year. FSTR beat the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 140.5%, on average.
Kopperscurrently carries a Zacks Rank #2.The consensus estimate for current-year earnings for KOP is currently pegged at $4.40, suggesting a year-over-year growth of 6.3%. Koppers’shares have rallied roughly 49.6% in the past year.
The Zacks Consensus Estimate for Linde’s current-year earnings has been revised 4.4% upward in the past 60 days. LIN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 6.9%. The company’s shares have gained 33.5% in the past year.