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Here's Why You Should Hold Onto PPG Industries (PPG) for Now
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PPG Industries Inc. (PPG - Free Report) is poised on gain from its cost management actions, pricing initiatives and acquisitions amid certain challenges including weak industrial demand.
Shares of the paints giant are down 20.4% over the past year, compared with its industry’s 38.3% decline.
Let’s delve deeper to find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Aiding PPG?
PPG Industries is actively managing costs and is also taking appropriate pricing actions amid a challenging operating backdrop. It remains focused on improving its cost structure and recovering margins through price hikes.
The company achieved more than $20 million in cost savings in the fourth quarter of 2019. It expects to deliver an incremental $75 million in combined savings from its 2018 and 2019 restructuring programs in 2020.
PPG Industries is also taking steps to grow business through strategic acquisitions. It completed four value-creating acquisitions in 2019 and realized more than $300 million of acquisition sales for the year.
PPG Industries, in early 2019, completed the acquisitions of Whitford Worldwide and Hemmelrath. The Whitford buyout further strengthened PPG Industries’ robust industrial coatings solutions portfolio while the Hemmelrath acquisition expanded its range of automotive coating products.
Moreover, the purchase of specialty materials maker, Dexmet Corporation, enables the company to add value to customers by enhancing product offerings as well as expanding R&D capabilities. The acquisition of Industria Chimica Reggiana also complements the company’s current product offerings for the automotive refinish and light industrial coatings industries. The company also recently closed the acquisition of Alpha Coating Technologies.
Moreover, the company remains committed in its cash deployment with a focus on shareholder value creation over the long term. The company, in 2019, raised its quarterly dividend by 6% to 51 cents per share. PPG Industries returned around $800 million to shareholders in 2019.
A Few Worries
The company is exposed to headwind from sluggish global industrial activities. It faced a soft industrial production environment in 2019. PPG Industries saw a reduction in global automotive OEM industry production activities, which affected its sales volumes in the fourth quarter of 2019.
Although the company is seeing a modest recovery in industrial demand in China, it expects soft general industrial demand to continue in the United States and Europe. The company’s sales volumes in the Industrial Coatings segment are expected to remain under pressure over the near term amid weak industrial demand. PPG Industries does not expect a rebound in volume growth in this segment before the second half of 2020.
The company also faces some headwinds from unfavorable currency translation. It expects unfavorable currency swings to lower its net sales by $20-$40 million and reduce net income by $3-$5 million in 2020.
PPG Industries also sees currency translation headwinds to impact net sales by $15-$40 million in the first quarter of 2020. As such, headwinds from unfavorable currency may exert pressure on its sales and margins.
Better-ranked stocks worth considering in the basic materials space are The Scotts Miracle-Gro Company (SMG - Free Report) , NovaGold Resources Inc. (NG - Free Report) and Newmont Corporation (NEM - Free Report) .
Scotts Miracle-Gro has an expected earnings growth rate of 15.9% for the current fiscal year. The company’s shares have gained roughly 42% in the past year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NovaGold has a projected earnings growth rate of 11.1% for the current year. It currently carries a Zacks Rank #2 (Buy). The company’s shares have surged roughly 178% in a year.
Newmont has a projected earnings growth rate of 87.1% for the current year. The company’s shares have rallied around 82% in a year. It currently has a Zacks Rank #2.
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Here's Why You Should Hold Onto PPG Industries (PPG) for Now
PPG Industries Inc. (PPG - Free Report) is poised on gain from its cost management actions, pricing initiatives and acquisitions amid certain challenges including weak industrial demand.
Shares of the paints giant are down 20.4% over the past year, compared with its industry’s 38.3% decline.
Let’s delve deeper to find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Aiding PPG?
PPG Industries is actively managing costs and is also taking appropriate pricing actions amid a challenging operating backdrop. It remains focused on improving its cost structure and recovering margins through price hikes.
The company achieved more than $20 million in cost savings in the fourth quarter of 2019. It expects to deliver an incremental $75 million in combined savings from its 2018 and 2019 restructuring programs in 2020.
PPG Industries is also taking steps to grow business through strategic acquisitions. It completed four value-creating acquisitions in 2019 and realized more than $300 million of acquisition sales for the year.
PPG Industries, in early 2019, completed the acquisitions of Whitford Worldwide and Hemmelrath. The Whitford buyout further strengthened PPG Industries’ robust industrial coatings solutions portfolio while the Hemmelrath acquisition expanded its range of automotive coating products.
Moreover, the purchase of specialty materials maker, Dexmet Corporation, enables the company to add value to customers by enhancing product offerings as well as expanding R&D capabilities. The acquisition of Industria Chimica Reggiana also complements the company’s current product offerings for the automotive refinish and light industrial coatings industries. The company also recently closed the acquisition of Alpha Coating Technologies.
Moreover, the company remains committed in its cash deployment with a focus on shareholder value creation over the long term. The company, in 2019, raised its quarterly dividend by 6% to 51 cents per share. PPG Industries returned around $800 million to shareholders in 2019.
A Few Worries
The company is exposed to headwind from sluggish global industrial activities. It faced a soft industrial production environment in 2019. PPG Industries saw a reduction in global automotive OEM industry production activities, which affected its sales volumes in the fourth quarter of 2019.
Although the company is seeing a modest recovery in industrial demand in China, it expects soft general industrial demand to continue in the United States and Europe. The company’s sales volumes in the Industrial Coatings segment are expected to remain under pressure over the near term amid weak industrial demand. PPG Industries does not expect a rebound in volume growth in this segment before the second half of 2020.
The company also faces some headwinds from unfavorable currency translation. It expects unfavorable currency swings to lower its net sales by $20-$40 million and reduce net income by $3-$5 million in 2020.
PPG Industries also sees currency translation headwinds to impact net sales by $15-$40 million in the first quarter of 2020. As such, headwinds from unfavorable currency may exert pressure on its sales and margins.
PPG Industries, Inc. Price and Consensus
PPG Industries, Inc. price-consensus-chart | PPG Industries, Inc. Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space are The Scotts Miracle-Gro Company (SMG - Free Report) , NovaGold Resources Inc. (NG - Free Report) and Newmont Corporation (NEM - Free Report) .
Scotts Miracle-Gro has an expected earnings growth rate of 15.9% for the current fiscal year. The company’s shares have gained roughly 42% in the past year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NovaGold has a projected earnings growth rate of 11.1% for the current year. It currently carries a Zacks Rank #2 (Buy). The company’s shares have surged roughly 178% in a year.
Newmont has a projected earnings growth rate of 87.1% for the current year. The company’s shares have rallied around 82% in a year. It currently has a Zacks Rank #2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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