PPG Industries (PPG) Up 23% in 3 Months: What’s Driving It?

PPG Industries Inc.’s PPG shares have popped 22.9% over the past three months. The company has also outperformed its industry’s rise of 18.2% to over the same time frame. PPG Industries, a Zacks Rank #2 (Buy) stock, has a market cap of roughly $27.9 billion and average volume of shares […]

PPG Industries Inc.’s PPG shares have popped 22.9% over the past three months. The company has also outperformed its industry’s rise of 18.2% to over the same time frame.

PPG Industries, a Zacks Rank #2 (Buy) stock, has a market cap of roughly $27.9 billion and average volume of shares traded in the last three months is around 1,581.3K. The company has an expected long-term earnings per share growth of 5%.

 

 

 

Let’s delve deeper into the factors behind the stock’s price appreciation.

What’s Favoring the Stock?

Forecast-topping earnings performance in the second quarter has contributed to the gain in PPG Industries’ shares. The company’s adjusted earnings per share of 99 cents for the second quarter topped the Zacks Consensus Estimate of 65 cents.

Earnings estimate revisions also have the greatest impact on stock prices. Over the past two months, the Zacks Consensus Estimate for PPG Industries for the current year has increased around 15.8%. The consensus estimate for 2021 has also been revised 5.8% upward over the same time frame.

PPG Industries is actively managing costs amid a challenging environment due to the coronavirus pandemic. It achieved an interim cost savings of roughly $170 million in the second quarter from its cost mitigation actions. Moreover, the company achieved more than $20 million in cost savings from its restructuring programs in the second quarter.

PPG Industries also expects incremental restructuring savings of $30-$35 million in the third quarter. It sees restructuring savings of $60-$70 million in the second half of 2020.

The company, in June, also approved substantial restructuring actions to lower its global cost structure. The plan includes a voluntary separation program that was offered in the United States and Canada. Upon completion, PPG Industries anticipates the planned actions to offer $160-$170 million in annual pre-tax cost savings.

Moreover, the company remains committed to boost returns to shareholders leveraging strong cash flows. In July 2020, it raised its quarterly dividend by 6% to 54 cents per share. Notably, PPG Industries has raised its annual dividend payout for 49th straight year. The company paid dividend worth $120 million in the second quarter. It generated around $500 million of cash from operations during the quarter.

PPG Industries is also taking steps to grow business inorganically through strategic acquisitions. The acquisition of specialty materials maker, Dexmet Corporation, has allowed the company to add value to its customers by enhancing product offerings as well as expanding R&D capabilities. The purchase of Industria Chimica Reggiana also complements the company’s current product offerings for the automotive refinish and light industrial coatings industries. Earlier this year, the company also closed the acquisition of Alpha Coating Technologies. Acquisitions are expected to contribute to the company’s top line this year.

PPG Industries, Inc. Price and Consensus

 

PPG Industries, Inc. Price and Consensus

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

 

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Barrick Gold Corporation GOLD, Yamana Gold Inc. AUY and Eldorado Gold Corporation EGO.

Barrick Gold has a projected earnings growth rate of 80.4% for the current year. The company’s shares have gained around 52% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Yamana Gold has a projected earnings growth rate of 76.9% for the current year. The company’s shares have rallied roughly 67% in a year. It currently carries a Zacks Rank #2.

Eldorado Gold has an expected earnings growth rate of 2,325% for the current year. The company’s shares have gained around 19% in the past year. It presently carries a Zacks Rank #2.

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