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PPG Industries Sees Loss in Q3, Declares $2B Share Buyback


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PPG Industries (PPG - Analyst Report) said that it expects to post a loss from continuing operations of between 74 cents and 77 cents per share on a reported basis in the third quarter of 2016 due to pension settlement charges of $2.31 per share. The company recorded earnings from continuing operations of $1.52 per share on a reported basis a year ago.

On an adjusted basis, the coatings giant expects earnings from continuing operations in the band of $1.54 to $1.57 per share for the third quarter, compared with $1.54 per share a year ago. PPG Industries also expects net sales of roughly $3.8 billion for the third quarter. PPG Industries will discuss third-quarter results in detail on Oct 20.

PPG Industries noted that it continues to operate in a weak economic environment and is disappointed with third quarter’s EPS growth rate. Notwithstanding slower-than-expected growth in Europe, volumes rose more than 1.5% in the quarter, the company added. PPG Industries is considering potential actions to cut its overall cost structure. These are in addition to the restructuring program that the company announced last year.

PPG Industries also said that its board has authorized a share repurchase program worth $2 billion. This is in addition to the company’s existing share repurchase authorization that was approved in 2014 and had around $520 million remaining as of Sep 30, 2016. The new share repurchase authorization is effective immediately.

PPG Industries has deployed around $1.85 billion of cash on acquisitions and share buybacks (including share repurchases of roughly $250 million completed during third-quarter 2016), against its earlier stated target of $2-$2.5 billion for 2015 and 2016 combined.

PPG Industries’ shares closed roughly 8.3% lower at $93.73 last Friday, reflecting the weak third-quarter view.

PPG Industries is a Zacks Rank #4 (Sell).

Stocks to Consider
Some better-ranked companies in the chemical space include Univar Inc. (UNVR - Snapshot Report) , The Chemours Company (CC - Snapshot Report) and Cabot Corporation (CBT - Snapshot Report) .

Univar sports a Zacks Rank #1 (Strong Buy). The company has an expected earnings growth of 244.4% for the current year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected earnings growth of around 20.3% for the current year. The stock carries a Zacks Rank #1.

Cabot, currently holding a Zacks Rank #2 (Buy), has an expected earnings growth of roughly 12.1% for the current year.

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