PPG Industries (PPG) Shares Up 16% in 6 Months: Here's Why
PPG Industries Inc.’s PPG shares have popped 15.5% over the past six months.
The company has outperformed its industry’s growth of 11.5% and the S&P 500’s roughly 14.7% rise over the same period.
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Let’s take a look at the factors behind the stock’s price appreciation.
Cost Cuts, Pricing and Acquisitions Aid PPG
PPG Industries is benefiting from higher pricing across its segments, manufacturing efficiencies, cost discipline and efforts to build its business through acquisitions amid hurdles from European and Chinese demand downturn.
The Zacks Rank #1 (Strong Buy) company is restructuring and cutting costs while optimizing working capital requirements. The cost savings realized by these restructuring activities will aid the company’s performance. PPG Industries has undertaken considerable cost-cutting efforts, especially in locations and end markets with adverse business conditions. The company anticipates incremental restructuring savings of $10-$15 million in the second quarter of 2023.
PPG Industries is also increasing selling prices across all its divisions to counteract the effects of rising energy, shipping and raw material costs. The company's profits expanded significantly in the first quarter because of segment-specific pricing growth, greater manufacturing efficiencies and general cost control. Pricing policies are likely to continue strengthening its margins for the rest of 2023.
Additionally, the company is taking strides to expand its demographic through beneficial acquisitions. The company's performance in 2023 is anticipated to be supported by contributions from the acquisitions. This year, buyouts, including Tikkurila, Worwag and Cetelon, are likely to have a positive impact on the company's top line.
Estimates Going Up
Over the past 90 days, the Zacks Consensus Estimate for PPG for second-quarter 2023 has increased around 10.3%. The consensus estimate for 2023 has also been revised 5.34% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Other Stocks to Consider
Other top-ranked stocks to consider in the basic materials space include Carpenter Technology Corporation CRS, Silvercorp Metals Inc. SVM and ATI Inc. ATI.
CRS currently carries a Zacks Rank #1. The Zacks Consensus Estimate for current-year earnings for CRS is currently pegged at $1.04, implying year-over-year growth of 198.1%. It has a trailing four-quarter earnings surprise of roughly 30.9%, on average. The stock has gained around 97.7% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silvercorp Metals currently carries a Zacks Rank #2 (Buy). The consensus estimate for current fiscal-year earnings for Silvercorp is pegged at 27 cents, suggesting year-over-year growth of 28.6%. It has a trailing four-quarter earnings surprise of roughly 12.5%, on average The stock has jumped roughly 42.6% in the past year.
ATI currently carries a Zacks Rank #2. The Zacks Consensus Estimate for ATI's current-year earnings has been stable over the past 60 days. ATI’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 13%, on average. ATI shares have gained around 87.9% in a year.
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