PPG Lowers Q3 Earnings View on Weak Demand in Europe & China
PPG Industries Inc. PPG said that it expects its adjusted earnings per share for the third quarter of 2022 to be 5-7% below the bottom end of its guidance range of $1.75-$2.00 that was earlier announced in July.
The Pittsburgh-based paint giant noted that its sales were impacted by the further weakening of demand in Europe in comparison with its forecast at the beginning of the third quarter. Demand recovery in China was also lower than expected on a sequential comparison basis due to the resumption of certain pandemic-related restrictions.
The declines in sales volume were most pronounced in September, leading to a reduction in the earnings benefit from increased selling prices and lower manufacturing efficiencies versus the earlier forecast, the company noted.
PPG Industries envisions weaker demand conditions to continue into the fourth quarter of 2022. It also sees sustained higher levels of unfavorable foreign currency translation impact. Moreover, raw material cost inflation remains at historically high levels but has started to moderate in some regions.
The company expects selling prices to rise 10-12% compared with the prior-year fourth quarter, and also increase 18-20% on a two-year stacked basis. It anticipates fourth-quarter year-over-year segment earnings growth of nearly 20%, as segment margin recovery momentum accelerates on a year-over-year basis.
PPG Industries will announce third-quarter results and provide further information on expectations for the fourth quarter after the closing bell on Oct 19.
Shares of PPG Industries have lost 28.4% in the past year compared with 13.6% decline of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
PPG Industries currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation ALB, Ryerson Holding Corporation RYI and Sociedad Quimica y Minera de Chile S.A. SQM.
Albemarle, currently sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 426.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 22.1% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 22% in a year.
Ryerson Holding, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 74.2% for the current year. The consensus estimate for RYI's earnings for the current year has been revised 3.2% upward in the past 60 days.
Ryerson Holding’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 28.9%. RYI has gained around 31% over a year.
Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 18.8% upward in the past 60 days.
Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 70% in a year. The company currently carries a Zacks Rank #2 (Buy).
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
Albemarle Corporation (ALB) : Free Stock Analysis Report
Sociedad Quimica y Minera S.A. (SQM) : Free Stock Analysis Report
Ryerson Holding Corporation (RYI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
