U.S. Markets closed
  • S&P 500

    4,432.99
    -40.76 (-0.91%)
     
  • Dow 30

    34,584.88
    -166.44 (-0.48%)
     
  • Nasdaq

    15,043.97
    -137.96 (-0.91%)
     
  • Russell 2000

    2,236.87
    +3.96 (+0.18%)
     
  • Crude Oil

    71.96
    -0.65 (-0.90%)
     
  • Gold

    1,753.90
    -2.80 (-0.16%)
     
  • Silver

    22.42
    -0.33 (-1.44%)
     
  • EUR/USD

    1.1732
    -0.0040 (-0.3402%)
     
  • 10-Yr Bond

    1.3700
    +0.0390 (+2.93%)
     
  • Vix

    20.81
    +2.12 (+11.34%)
     
  • GBP/USD

    1.3737
    -0.0059 (-0.4286%)
     
  • USD/JPY

    109.8950
    +0.1770 (+0.1613%)
     
  • BTC-USD

    48,311.39
    +999.82 (+2.11%)
     
  • CMC Crypto 200

    1,193.48
    -32.05 (-2.62%)
     
  • FTSE 100

    6,963.64
    -63.84 (-0.91%)
     
  • Nikkei 225

    30,500.05
    +176.71 (+0.58%)
     

PPG Industries (PPG) Up 19% YTD: What's Driving the Stock?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

PPG Industries, Inc.’s PPG shares have shot up 19.3% year to date, outperforming the industry’s rise of 10%. The company has also topped the S&P 500’s 16.7% rise over the same period.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Let’s dive into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.

What’s Favoring the Stock?

The solid first-quarter performance contributed to the company’s share price gain. PPG Industries recorded adjusted earnings of $1.88 per share, increasing from the year-ago quarter’s $1.31 and topping the Zacks Consensus Estimate of $1.58. Net sales rose roughly 15% year over year to $3,881 million, surpassing the Zacks Consensus Estimate of $3,691.6 million. Earnings estimates for the second quarter have been stable in the past month.

The continued global economic recovery saw growth in PPG’s sales volumes by around 7% year over year along with higher volumes in every segment over the same period. A rise in the demand for automotive and general industrial coatings, a favorable foreign currency transition, acquisitions and an increase in selling prices have acted as tailwinds. The company expects the overall global coatings demand to continue to be broad-based in many of the end-use markets served.

An aggressive cost-cutting and restructuring strategy has been beneficial for the company, helping it deliver incremental structural cost savings of around $115 million in 2020 and another $35 million in first-quarter 2021. Cost savings from these restructuring efforts will act as a positive catalyst for PPG. It is hopeful of achieving additional restructuring savings of $30 million in the second quarter and $125 million in full-year 2021.

Acquisitions have also been a positive driving force for the company, adding to its scale of operations and portfolio as well as leading to value creation for its customers. The recent acquisitions of Ennis-Flint in December 2020, Versaflex in first-quarter 2021, and Worwag and Tikkurila in the second quarter are anticipated to significantly drive its sales and deliver synergies in the range of $25-$30 million for 2021. The Tikkurila buyout provides the company with a base in many northern and eastern European countries, while the Worwag transaction helps expand its current customer distribution in key geographies.

The company also stands to benefit from a diversified business in terms of products offered and regions served, in turn enabling it to deliver growth to shareholders by mobilizing opportunities in fast-growing regions. It is also dedicated to boosting shareholder returns. In 2020, the company returned around $500 million to shareholders through dividends. It also paid out dividends worth $130 million in the last reported quarter. PPG Industries had roughly $1.5 billion remaining under its current share repurchase authorization at the end of 2020.

PPG Industries, Inc. Price and Consensus

PPG Industries, Inc. Price and Consensus
PPG Industries, Inc. Price and Consensus

PPG Industries, Inc. price-consensus-chart | PPG Industries, Inc. Quote

Other Stocks to Consider

Other top-ranked stocks in the basic materials space include Orion Engineered Carbons S.A OEC, Avient Corporation AVNT and Cabot Corporation CBT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Orion has a projected earnings growth rate of 79.8% for the current year. The company’s shares have surged 77.8% over a year.

Avient has a projected earnings growth rate of 64.2% for the current year. The company’s shares have appreciated 91.2% over a year.

Cabot has a projected earnings growth rate of 137.5% for the current year. The company’s shares have jumped 55.4% over a year.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

PPG Industries, Inc. (PPG) : Free Stock Analysis Report

Cabot Corporation (CBT) : Free Stock Analysis Report

Orion Engineered Carbons S.A (OEC) : Free Stock Analysis Report

Avient Corporation (AVNT) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research