PPG Industries Inc. PPG has a diversified business and a leading position in several paints and coatings end markets. The company is gaining from acquisitions and healthy momentum across automotive OEM, automotive refinish and aerospace markets.
PPG Industries also has been actively focused on growing its business inorganically, manifested by major buyouts (including Comex) and its aggressive cost cutting and restructuring actions. It should also gain from its restructuring actions that include right-sizing headcount and production capacity. However it faces macroeconomic challenges, stemming from a sluggish global economy. Currency headwinds and weakness in Europe have been major concerns for the company.
Let’s have a quick look at this Pittsburgh-based coating giant’s first-quarter 2016 release.
Estimate Trend & Surprise History
Investors should note that the earnings estimate for PPG Industries for the first quarter has seen an uptrend over the last month. PPG Industries has beaten the Zacks Consensus Estimate in 2 out of the 4 trailing quarters with an average beat of 1.20%. Investors have been eagerly awaiting PPG Industries’ latest earnings report to see whether it starts 2016 with a beat in the first quarter.
Earnings
PPG Industries logged adjusted earnings of $1.31 per share for the quarter, up 11% year over year. It beat the Zacks Consensus Estimate of $1.30 per share by a penny. The results benefited from higher earnings in each reporting segment.
Revenues
PPG Industries posted first-quarter revenues of $3,672 million, essentially flat year over year. It trailed the Zacks Consensus Estimate of $3,681 million. Unfavorable currency impact weighed on sales. In local currencies, net sales rose by 4%. Acquisitions contributed 3% to sales.
Key Stats/Developments to Note
PPG Industries remains committed to deliver higher organic growth, including continued commercialization of its innovative, industry-leading coatings technologies. The quarter saw increased growth in Europe and expects the trend to continue. The company expects regional demand in the U.S. and Canada to improve incrementally year over year. Unfavorable currency translation in sales as well as income moderated in the reported quarter. The company repurchased 1.5 million shares worth $150 million in the quarter.
Zacks Rank
PPG Industries currently has a Zacks Rank #3 (Hold), but that could change following the company’s earnings report which was just released.
Market Reaction
PPG Industries’ shares were inactive in pre-market trading. It would be interesting to see how the market reacts to the results during the trading session today.