PPG Industries, Inc. (NYSE:PPG) Analysts Are Cutting Their Estimates: Here's What You Need To Know
PPG Industries, Inc. (NYSE:PPG) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to US$90.83 in the week after its latest quarterly results. Results were roughly in line with estimates, with revenues of US$3.4b and statutory earnings per share of US$1.02. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on PPG Industries after the latest results.
View our latest analysis for PPG Industries
Following the recent earnings report, the consensus from 22 analysts covering PPG Industries is for revenues of US$13.0b in 2020, implying a considerable 13% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to sink 14% to US$4.24 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$14.2b and earnings per share (EPS) of US$4.97 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$106 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values PPG Industries at US$148 per share, while the most bearish prices it at US$82.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 13% revenue decline a notable change from historical growth of 0.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.0% annually for the foreseeable future. It's pretty clear that PPG Industries' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$106, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for PPG Industries going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for PPG Industries you should be aware of.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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