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Why Is PPG Industries (PPG) Up 8.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for PPG Industries (PPG - Free Report) . Shares have added about 8.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PPG Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
PPG Industries' Q3 Earnings and Sales Beat Estimates
PPG Industries reported third-quarter 2023 profit of $426 million or $1.79 per share, up from $329 million or $1.39 per share in the year-ago quarter.
In the reported quarter, excluding one-time items, adjusted earnings per share increased to $2.07 from $1.66 in the year-ago quarter, surpassing the Zacks Consensus Estimate of $1.95.
The company’s revenues were $4.64 billion in the quarter, up roughly 4% year over year. The upside can be attributed to higher selling prices. The top line surpassed the Zacks Consensus Estimate of $4.62 billion.
The aggregate segment margin increased 260 bps from the year-ago quarter, representing the fourth consecutive quarter of year-over-year margin growth.
Segment Review
The Performance Coatings segment’s third-quarter revenues increased 6% year over year to $2.88 billion. Performance Coatings' net sales rose as a result of favorable foreign exchange swings and higher selling prices. Segment income climbed 25% year over year, owing mostly to higher selling prices and moderating input costs that are going lower from historically high levels. Year over year, segment operating margins increased 230 bps.
Revenues in the Industrial Coatings segment were flat year over year at $1.76 billion, as reduced sales volumes were offset by higher selling prices, a net benefit from acquisitions and divestitures, and positive foreign currency translation. Segment income increased 28% over the previous year, owing mostly to higher selling prices and lower raw material costs, offset by decreased sales volumes. Compared to the third quarter of 2022, segment margins grew 300 bps.
Financials
At the end of third quarter, the company had almost $1.3 billion in cash and short-term investments. Net debt was $4.9 billion, down nearly $800 million from the prior-year quarter.
In the third quarter, acquisition-related synergies and company restructuring activities generated around $15 million in incremental cost savings.
Outlook
PPG expects total organic sales to be up or down a low single-digit percent in the fourth quarter. The company's projected adjusted EPS for the fourth quarter is in the range of $1.44-$1.50. For the full year, the company raised its adjusted EPS projection to the band of $7.58-$7.64.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, PPG Industries has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, PPG Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is PPG Industries (PPG) Up 8.7% Since Last Earnings Report?
It has been about a month since the last earnings report for PPG Industries (PPG - Free Report) . Shares have added about 8.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PPG Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
PPG Industries' Q3 Earnings and Sales Beat Estimates
PPG Industries reported third-quarter 2023 profit of $426 million or $1.79 per share, up from $329 million or $1.39 per share in the year-ago quarter.
In the reported quarter, excluding one-time items, adjusted earnings per share increased to $2.07 from $1.66 in the year-ago quarter, surpassing the Zacks Consensus Estimate of $1.95.
The company’s revenues were $4.64 billion in the quarter, up roughly 4% year over year. The upside can be attributed to higher selling prices. The top line surpassed the Zacks Consensus Estimate of $4.62 billion.
The aggregate segment margin increased 260 bps from the year-ago quarter, representing the fourth consecutive quarter of year-over-year margin growth.
Segment Review
The Performance Coatings segment’s third-quarter revenues increased 6% year over year to $2.88 billion. Performance Coatings' net sales rose as a result of favorable foreign exchange swings and higher selling prices. Segment income climbed 25% year over year, owing mostly to higher selling prices and moderating input costs that are going lower from historically high levels. Year over year, segment operating margins increased 230 bps.
Revenues in the Industrial Coatings segment were flat year over year at $1.76 billion, as reduced sales volumes were offset by higher selling prices, a net benefit from acquisitions and divestitures, and positive foreign currency translation. Segment income increased 28% over the previous year, owing mostly to higher selling prices and lower raw material costs, offset by decreased sales volumes. Compared to the third quarter of 2022, segment margins grew 300 bps.
Financials
At the end of third quarter, the company had almost $1.3 billion in cash and short-term investments. Net debt was $4.9 billion, down nearly $800 million from the prior-year quarter.
In the third quarter, acquisition-related synergies and company restructuring activities generated around $15 million in incremental cost savings.
Outlook
PPG expects total organic sales to be up or down a low single-digit percent in the fourth quarter. The company's projected adjusted EPS for the fourth quarter is in the range of $1.44-$1.50. For the full year, the company raised its adjusted EPS projection to the band of $7.58-$7.64.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, PPG Industries has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, PPG Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.