Back to top

Image: Bigstock

PPG Industries (PPG) to Post Q4 Earnings: What's in Store?

Read MoreHide Full Article

PPG Industries, Inc. (PPG - Free Report) is scheduled to report fourth-quarter 2023 results after the closing bell on Jan 18.

The company surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of around 8.9% on average.

The stock has gained 11.4% over the past year compared with a 17.6% rise recorded by its industry.

Zacks Investment Research
Image Source: Zacks Investment Research

What Do the Estimates Say?

The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $4,266.5 million, which implies a rise of around 1.9% from the year-ago reported number.  

Our estimate for PPG’s Industrial Coatings segment’s net sales is pegged at $1,656 million, indicating a year-over-year decline of 2.3%.

Also, our estimate for net sales for PPG’s Performance Coatings segment stands at $2,600.8 million, suggesting an increase of 4.5%.

Factors to Watch

In the fourth quarter, PPG is likely to have benefited from higher pricing across its segments, manufacturing efficiencies, cost actions and efforts to grow its business through acquisitions. The company is implementing a cost-cutting and restructuring strategy, as well as optimizing its working capital needs.

Cost savings realized by these restructuring actions are likely to have benefited the company. PPG Industries has made considerable cost-cutting efforts, focused especially on locations and end markets with poor economic conditions. In the third quarter of 2023, PPG saved $15 million through restructuring initiatives and acquisition synergies, and it expects to save another $15 million in the fourth quarter.

PPG is raising selling prices across its business segments in order to offset the impact of raw material and other cost inflation and drive profitability. Significant progress has been made in raising consolidated segment margins, which were more than 15% in the third quarter of 2023, up 260 basis points year over year, thanks to high selling price realization. Pricing actions are likely to have improved its profits in the fourth quarter.

The company is taking steps to build its business inorganically by making value-creating acquisitions. Acquisition contributions are expected to be reflected in the company's fourth-quarter performance. Acquisitions such as Tikkurila, Worwag and Cetelon are likely to have supported its top line.

However, the company remains exposed to weak demand in Europe and China. Industrial production remains subdued, owing to cautious consumer spending in Europe and a delayed recovery in China. Furthermore, declining demand in key end-use markets in the United States exacerbates the situation.

Global industrial output is likely to have remained sluggish in the fourth quarter. PPG expects overall organic sales in the Industrial Coatings unit to fall by a low single-digit percentage in the fourth quarter. Industrial production in end-use markets such as industrial coatings and packaging coatings is expected to have remained subdued. In the fourth quarter, the company expects industrial coatings activity to remain lower in most regions.

PPG Industries, Inc. Price and EPS Surprise

PPG Industries, Inc. Price and EPS Surprise

PPG Industries, Inc. price-eps-surprise | PPG Industries, Inc. Quote

Zacks Model

Our proven model does not conclusively predict an earnings beat for PPG 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 -0.30%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at $1.49.  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 Zacks Rank #4 (Sell).

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:

Carpenter Technology Corporation (CRS - Free Report) , slated to release its earnings on Jan 25, has an Earnings ESP of +0.59% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for CRS’ fiscal second-quarter earnings per share is currently pegged at 85 cents.

Barrick Gold Corporation (GOLD - Free Report) , scheduled to release fourth-quarter earnings on Feb 14, has an Earnings ESP of +18.11%.

The Zacks Consensus Estimate for Barrick's earnings for the fourth quarter is currently pegged at 25 cents. GOLD currently carries a Zacks Rank #3.

Steel Dynamics Inc. (STLD - Free Report) , slated to release earnings on Jan 23, has an Earnings ESP of +3.08% and carries a Zacks Rank #1 at present.

The consensus mark for STLD’s fourth-quarter earnings is currently pegged at $2.55.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

 

Published in