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PPG Industries (PPG) Up 5% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for PPG Industries, Inc. (PPG - Free Report) . Shares have added about 5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it 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 drivers.
PPG Industries Beats on Earnings in Q4, Sales Miss
PPG Industries reported adjusted earnings of $1.19 per share for the fourth quarter of 2016, up 1.6% from the year-ago figures of $1.16. The results beat the Zacks Consensus Estimate of $1.18 per share.
One-time charges of $236 million in the quarter include charges related to business restructuring, increase in legacy environmental reserves and asbestos settlement funding. Other expenses include premium on the early retirement of debt and $44 million for the loss on the sale of the European fiber glass business offset by a $33 million net gain on the disposals of ownership interests in business affiliates.
Including these charges, net income from continuing operations was $77 million or $0.29 per share in the reported quarter, as against a profit of $295 million or $1.09 per share, a year ago.
Net sales in the quarter were down 1.6% year over year at $3,497 million. Sales trailed the Zacks Consensus Estimate of $3,552 million.
Unfavorable currency translation affected sales by 3%. The net effect of portfolio actions contributed less than 1% to total sales. Sales volume increased almost 2%.
Full-year Highlights
PPG Industries reported profits of $564 million, or $2.11 per share, for full-year 2016, down from $1.34 billion, or $4.89 per share, reported in 2015. Adjusted earnings for the year increased 7.2% to $5.82 per share.
For full-year 2016, net sales from continuing operations were $14.8 billion, consistent with the prior year. Unfavorable foreign currency translation impacted sales by almost 3%. Sales volume in the year grew 1% year on year and acquisitions related sales improved almost 2%, net of the European fiber glass divestiture.
Segment Review
Performance Coatings: The segment recorded $1.98 billion in sales and income of $239 million in the reported quarter. Sales at the segment fell less than 4% year over year. Currency translation reduced segment sales by about $70 million or 3%. Acquisition-related sales provided minimal benefit.
Segment income fell 4% year over year as favorable impact of cost management initiatives were more than offset by lower sales volume and currency headwinds. Automotive refinish coatings and architectural coatings – America and Asia Pacific sales grew at a low single digit clip in constant currencies, while the protective and marine coatings sales volumes declined.
Industrial Coatings: Sales at the segment were $1.44 billion, up almost 5% from the prior-year period. Total sales volume improved by almost 5%, led by high growth in the emerging markets.
Net income for the segment was $236 million, down less than 2% year over year. The decline was largely driven by higher transportation and logistics costs along with unfavorable currency translation, which more than offset growth in sales volume and continued lower costs from restructuring and manufacturing cost efficiencies as well as acquisition-related income.
Glass Segment: Sales were down 34% at $80 million, mainly due to the divestiture of the European fiber glass business. Sales volume for the remaining fiber glass business was down 3%. The company now operates only the North American fiber glass business. The flat glass business, the fiber glass businesses in Europe and fiber glass joint ventures in Asia have been discontinued. The segment’s income was $12 million, up from $11 million in the prior-year quarter, due to cost management initiatives.
Financial Position
PPG Industries ended the quarter with a cash balance of $1,820 million, up 38.8% year over year. Long-term debt fell 5.9% year over year to $3,787 million.
Outlook
PPG Industries expects an improvement in global growth, with improvement rates in developed regions gradually rising and continuing in emerging regions.
PPG Industries aims to boost shareholder returns with cash deployment. The company anticipates deploying $2.5–$3.5 billion cash in acquisitions and share repurchases for 2017 and 2018 combined.
How Have Estimates Been Moving Since Then?
Following the release, there has been one upward revision compared to one lower for the current quarter.
At this time, PPG Industries' stock has an nice Growth Score of 'B', though it is lagging on the momentum front with a 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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PPG Industries (PPG) Up 5% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for PPG Industries, Inc. (PPG - Free Report) . Shares have added about 5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it 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 drivers.
PPG Industries Beats on Earnings in Q4, Sales Miss
PPG Industries reported adjusted earnings of $1.19 per share for the fourth quarter of 2016, up 1.6% from the year-ago figures of $1.16. The results beat the Zacks Consensus Estimate of $1.18 per share.
One-time charges of $236 million in the quarter include charges related to business restructuring, increase in legacy environmental reserves and asbestos settlement funding. Other expenses include premium on the early retirement of debt and $44 million for the loss on the sale of the European fiber glass business offset by a $33 million net gain on the disposals of ownership interests in business affiliates.
Including these charges, net income from continuing operations was $77 million or $0.29 per share in the reported quarter, as against a profit of $295 million or $1.09 per share, a year ago.
Net sales in the quarter were down 1.6% year over year at $3,497 million. Sales trailed the Zacks Consensus Estimate of $3,552 million.
Unfavorable currency translation affected sales by 3%. The net effect of portfolio actions contributed less than 1% to total sales. Sales volume increased almost 2%.
Full-year Highlights
PPG Industries reported profits of $564 million, or $2.11 per share, for full-year 2016, down from $1.34 billion, or $4.89 per share, reported in 2015. Adjusted earnings for the year increased 7.2% to $5.82 per share.
For full-year 2016, net sales from continuing operations were $14.8 billion, consistent with the prior year. Unfavorable foreign currency translation impacted sales by almost 3%. Sales volume in the year grew 1% year on year and acquisitions related sales improved almost 2%, net of the European fiber glass divestiture.
Segment Review
Performance Coatings: The segment recorded $1.98 billion in sales and income of $239 million in the reported quarter. Sales at the segment fell less than 4% year over year. Currency translation reduced segment sales by about $70 million or 3%. Acquisition-related sales provided minimal benefit.
Segment income fell 4% year over year as favorable impact of cost management initiatives were more than offset by lower sales volume and currency headwinds. Automotive refinish coatings and architectural coatings – America and Asia Pacific sales grew at a low single digit clip in constant currencies, while the protective and marine coatings sales volumes declined.
Industrial Coatings: Sales at the segment were $1.44 billion, up almost 5% from the prior-year period. Total sales volume improved by almost 5%, led by high growth in the emerging markets.
Net income for the segment was $236 million, down less than 2% year over year. The decline was largely driven by higher transportation and logistics costs along with unfavorable currency translation, which more than offset growth in sales volume and continued lower costs from restructuring and manufacturing cost efficiencies as well as acquisition-related income.
Glass Segment: Sales were down 34% at $80 million, mainly due to the divestiture of the European fiber glass business. Sales volume for the remaining fiber glass business was down 3%. The company now operates only the North American fiber glass business. The flat glass business, the fiber glass businesses in Europe and fiber glass joint ventures in Asia have been discontinued. The segment’s income was $12 million, up from $11 million in the prior-year quarter, due to cost management initiatives.
Financial Position
PPG Industries ended the quarter with a cash balance of $1,820 million, up 38.8% year over year. Long-term debt fell 5.9% year over year to $3,787 million.
Outlook
PPG Industries expects an improvement in global growth, with improvement rates in developed regions gradually rising and continuing in emerging regions.
PPG Industries aims to boost shareholder returns with cash deployment. The company anticipates deploying $2.5–$3.5 billion cash in acquisitions and share repurchases for 2017 and 2018 combined.
How Have Estimates Been Moving Since Then?
Following the release, there has been one upward revision compared to one lower for the current quarter.
PPG Industries, Inc. Price and Consensus
PPG Industries, Inc. Price and Consensus | PPG Industries, Inc. Quote
VGM Scores
At this time, PPG Industries' stock has an nice Growth Score of 'B', though it is lagging on the momentum front with a 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.