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PPG Industries' (PPG) Earnings & Sales Beat Estimates in Q3

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Zacks Equity Research
·4 min read
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PPG Industries Inc. PPG reported net income from continuing operations of $442 million or $1.86 per share in third-quarter 2020, up from the year-ago quarter’s profit of $366 million or $1.54 per share.

Barring one-time items, adjusted earnings were $1.93 per share in the reported quarter, up 15.6% from $1.67 logged in the year-ago quarter. The figure also topped the Zacks Consensus Estimate of $1.92.

Net sales declined 3.7% year over year to $3,685 million. However, the figure surpassed the Zacks Consensus Estimate of $3,608.7 million. Sales volumes were down around 5% year over year, reflecting the impacts of the coronavirus pandemic.

PPG Industries, Inc. Price, Consensus and EPS Surprise

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

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

Segment Highlights

Performance Coatings: Net sales in the segment amounted to around $2.3 billion in the third quarter, down 3% year over year. Sales volume in the segment declined around 5% mainly due to the impacts of the coronavirus pandemic.  

Segment income rose 12% year over year to $426 million. The upside was backed by higher selling prices, restructuring initiatives and cost-mitigation efforts, which were partly offset by reduced sales volumes due to the pandemic.

Industrial Coatings: Sales in the segment totaled around $1.4 billion, down around 5% from the prior-year quarter’s figure. Sales volumes fell 5% year over year due to decline in global economic demand resulting from the pandemic.

Net income in the segment totaled $253 million, up around 23% year over year. Results gained from the company’s restructuring cost savings, aggressive cost-mitigation actions and higher selling prices, which were partly offset by lower sales volumes.

Financial Position

As of Sep 30, 2020, PPG Industries had cash and cash equivalents of $2,008 million, up 34.8% year over year. Long-term debt fell 1.2% year over year to $4,828 million.

Outlook

Going forward, the company expects to achieve restructuring savings of $30-$35 million in the fourth quarter of 2020.

PPG Industries also expects total sales volume for the fourth quarter to be down a low-to-mid-single digit percentage, differing by region and business.

Moreover, it anticipates corporate expenses of $55-$60 million and net interest expenses of $28-$30 million for the fourth quarter.

Price Performance

Shares of the company have gained 7.7% in the past year compared with 7.5% rise of the industry.

Zacks Rank & Other Key Picks

PPG Industries currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the basic materials space are Coeur Mining, Inc. CDE, Agnico Eagle Mines Limited AEM and Barrick Gold Corporation GOLD, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Coeur Mining has an expected earnings growth rate of 156% for 2020. The company’s shares have surged 57.3% in the past year.

Agnico Eagle has an expected earnings growth rate of 104.1% for 2020. Its shares have returned 50% in the past year.

Barrick has an expected earnings growth rate of 148% for 2020. The company’s shares have gained 60.9% in the past year.

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