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PPG Industries’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of around 7.7%, on average. The company reported an earnings surprise of around 2% in the last reported quarter.
The paint giant is expected to have benefited from acquisitions, pricing actions and restructuring cost savings. However, its performance is expected to have been impacted by weak industrial demand.
Shares of the company have declined 4.2% in the past year compared with a 9% fall of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $4,430.9 million, which implies a rise of around 1.2% from the year-ago reported number.
Our estimate for PPG’s Industrial Coatings segment’s net sales is pegged at $1,702.1 million, indicating a year-over-year decline of 2.9%.
Also, our estimate for net sales for PPG’s Performance Coatings segment stands at $2,702.9 million, suggesting an increase of 2.9%.
Factors at Play
PPG is likely to have benefited from higher pricing, manufacturing efficiencies, cost actions and efforts to grow its business through acquisitions in the first quarter. 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 2023, PPG achieved $60 million in incremental cost savings, with expectations of an additional $5-$7 million in restructuring savings in the first quarter of 2024.
PPG is raising selling prices across its business segments in order to offset cost inflation and drive profitability. It witnessed a significant year-over-year improvement in consolidated segment margin in 2023, thanks to strong selling price realization. Pricing actions are likely to continue to have aided its margins in the first quarter.
The company is taking steps to build its business inorganically by making value-creating acquisitions. Acquisition contributions are expected to reflect on the company's first-quarter performance. Acquisitions such as Tikkurila, Worwag and Cetelon are likely to have supported its top line.
However, the company remains exposed to weak industrial and architectural demand. Industrial production remains subdued, owing to cautious consumer spending in Europe and a delayed recovery in China. Furthermore, weakened demand in specific end-use markets within the United States has contributed to the challenges. Weak demand is likely to have impacted volumes in the first quarter.
Global industrial output is expected to have remained sluggish in the first quarter. PPG expects overall organic sales in the Industrial Coatings segment to decline by a low single-digit percentage on a year-over-year basis in the first quarter. Volumes in industrial coatings are expected to have remained under pressure in the to-be-reported quarter.
Our proven model does not conclusively predict an earnings beat for PPG Industries 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 0.00%. The Zacks Consensus Estimate for earnings for the first quarter is currently pegged at $1.86. 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 a Zacks Rank #3.
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Image: Bigstock
PPG Industries (PPG) to Post Q1 Earnings: What's in the Offing?
PPG Industries Inc. (PPG - Free Report) is set to release first-quarter 2024 results after the closing bell on Apr 18.
PPG Industries’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of around 7.7%, on average. The company reported an earnings surprise of around 2% in the last reported quarter.
The paint giant is expected to have benefited from acquisitions, pricing actions and restructuring cost savings. However, its performance is expected to have been impacted by weak industrial demand.
Shares of the company have declined 4.2% in the past year compared with a 9% fall of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $4,430.9 million, which implies a rise of around 1.2% from the year-ago reported number.
Our estimate for PPG’s Industrial Coatings segment’s net sales is pegged at $1,702.1 million, indicating a year-over-year decline of 2.9%.
Also, our estimate for net sales for PPG’s Performance Coatings segment stands at $2,702.9 million, suggesting an increase of 2.9%.
Factors at Play
PPG is likely to have benefited from higher pricing, manufacturing efficiencies, cost actions and efforts to grow its business through acquisitions in the first quarter. 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 2023, PPG achieved $60 million in incremental cost savings, with expectations of an additional $5-$7 million in restructuring savings in the first quarter of 2024.
PPG is raising selling prices across its business segments in order to offset cost inflation and drive profitability. It witnessed a significant year-over-year improvement in consolidated segment margin in 2023, thanks to strong selling price realization. Pricing actions are likely to continue to have aided its margins in the first quarter.
The company is taking steps to build its business inorganically by making value-creating acquisitions. Acquisition contributions are expected to reflect on the company's first-quarter performance. Acquisitions such as Tikkurila, Worwag and Cetelon are likely to have supported its top line.
However, the company remains exposed to weak industrial and architectural demand. Industrial production remains subdued, owing to cautious consumer spending in Europe and a delayed recovery in China. Furthermore, weakened demand in specific end-use markets within the United States has contributed to the challenges. Weak demand is likely to have impacted volumes in the first quarter.
Global industrial output is expected to have remained sluggish in the first quarter. PPG expects overall organic sales in the Industrial Coatings segment to decline by a low single-digit percentage on a year-over-year basis in the first quarter. Volumes in industrial coatings are expected to have remained under pressure in the to-be-reported quarter.
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 Industries 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 0.00%. The Zacks Consensus Estimate for earnings for the first quarter is currently pegged at $1.86. 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 a Zacks Rank #3.
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Agnico Eagle Mines Limited (AEM - Free Report) , scheduled to release earnings on Apr 25, has an Earnings ESP of +5.02% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for AEM’s earnings for the first quarter is currently pegged at 55 cents per share.
Dow Inc. (DOW - Free Report) , slated to release earnings on Apr 25, has an Earnings ESP of +2.28% and carries a Zacks Rank #3 at present.
The consensus mark for DOW’s first-quarter earnings is currently pegged at 47 cents.
Cleveland-Cliffs Inc. (CLF - Free Report) , scheduled to release first-quarter earnings on Apr 22, has an Earnings ESP of +12.00%.
The Zacks Consensus Estimate for CLF's earnings for the first quarter is currently pegged at 19 cents. CLF currently carries a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.