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PPG Industries Inc. (PPG - Free Report) reported net income from continuing operations of $368 million or $1.51 per share for third-quarter 2018, down roughly 6% from the year ago figure of $393 million or $1.52 per share.
Barring one-time items, adjusted earnings were $1.45 per share in the reported quarter, down around 5% year over year. It, however, beat the Zacks Consensus Estimate of $1.43.
The company’s restructuring initiatives as well as actions to hike selling prices and manage costs were, in part, offset by raw material and logistics cost inflation.
Net sales went up roughly 1% year over year to $3,817 million. It also beat the Zacks Consensus Estimate of $3,792 million. Unfavorable currency swings affected net sales by more than 2%. The company recorded net sales growth in constant currencies of more than 3%, supported by higher selling prices that rose more than 2%.
PPG Industries, Inc. Price, Consensus and EPS Surprise
Performance Coatings: The segment recorded around $2.3 billion in sales in the reported quarter, flat year over year. Sales rose more than 2% in constant currencies as higher selling prices more than offset modestly lower sales volumes. Unfavorable currency translation lowered net sales by roughly 2%.
Segment income fell 9% year over year to $331 million as raw material and logistics cost inflation and lower sales volumes more than offset higher selling prices and restructuring-related cost savings.
Industrial Coatings: Sales at the segment were $1.5 billion, up roughly 3% from the prior-year period. Total sales volume rose nearly 2% year over year. Acquisition-related sales provided benefits of around $30 million. Unfavorable currency translation lowered net sales by roughly 3%.
Net income at the segment was $169 million, down 25% year over year as raw material and logistics cost inflation more than offset higher selling prices and sales volumes.
Financial Position
PPG Industries ended the quarter with cash and cash equivalents of $1,103 million, down around 52% year over year. Long-term debt rose around 23% year over year to $5,023 million.
PPG Industries bought back shares totalling nearly $1.3 billion during the first nine months of 2018 including around $250 million in the third quarter.
Outlook
Moving ahead, PPG Industries sees normal business seasonality in the fourth quarter. It also envisions overall global economic growth to remain positive. The company witnessed higher industrial production volatility and inconsistency in emerging region growth rates during the third quarter and expects this to continue in the fourth quarter.
Based on these trends, PPG Industries expects generally consistent quarterly sales trends on a sequential comparison basis in the fourth quarter. The company projects fourth-quarter earnings per share in the range of $1.03-$1.13.
The company also expects to deploy roughly $1 billion in the fourth quarter on acquisitions and share repurchases.
Price Performance
PPG Industries has underperformed the industry over the past year. The company’s shares have moved down around 13.1% compared with roughly 11.5% decline recorded by the industry.
Zacks Rank & Stocks to Consider
PPG Industries currently carries a Zacks Rank #5 (Strong Sell).
Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have gained around 12% over the past six months.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. The company’s shares are up roughly 14% over the past six months.
CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have gained around 29% over the past six months.
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PPG Industries (PPG) Beats Q3 Earnings, Revenue Estimates
PPG Industries Inc. (PPG - Free Report) reported net income from continuing operations of $368 million or $1.51 per share for third-quarter 2018, down roughly 6% from the year ago figure of $393 million or $1.52 per share.
Barring one-time items, adjusted earnings were $1.45 per share in the reported quarter, down around 5% year over year. It, however, beat the Zacks Consensus Estimate of $1.43.
The company’s restructuring initiatives as well as actions to hike selling prices and manage costs were, in part, offset by raw material and logistics cost inflation.
Net sales went up roughly 1% year over year to $3,817 million. It also beat the Zacks Consensus Estimate of $3,792 million. Unfavorable currency swings affected net sales by more than 2%. The company recorded net sales growth in constant currencies of more than 3%, supported by higher selling prices that rose more than 2%.
PPG Industries, Inc. Price, Consensus and EPS Surprise
PPG Industries, Inc. price-consensus-eps-surprise-chart | PPG Industries, Inc. Quote
Segment Highlights
Performance Coatings: The segment recorded around $2.3 billion in sales in the reported quarter, flat year over year. Sales rose more than 2% in constant currencies as higher selling prices more than offset modestly lower sales volumes. Unfavorable currency translation lowered net sales by roughly 2%.
Segment income fell 9% year over year to $331 million as raw material and logistics cost inflation and lower sales volumes more than offset higher selling prices and restructuring-related cost savings.
Industrial Coatings: Sales at the segment were $1.5 billion, up roughly 3% from the prior-year period. Total sales volume rose nearly 2% year over year. Acquisition-related sales provided benefits of around $30 million. Unfavorable currency translation lowered net sales by roughly 3%.
Net income at the segment was $169 million, down 25% year over year as raw material and logistics cost inflation more than offset higher selling prices and sales volumes.
Financial Position
PPG Industries ended the quarter with cash and cash equivalents of $1,103 million, down around 52% year over year. Long-term debt rose around 23% year over year to $5,023 million.
PPG Industries bought back shares totalling nearly $1.3 billion during the first nine months of 2018 including around $250 million in the third quarter.
Outlook
Moving ahead, PPG Industries sees normal business seasonality in the fourth quarter. It also envisions overall global economic growth to remain positive. The company witnessed higher industrial production volatility and inconsistency in emerging region growth rates during the third quarter and expects this to continue in the fourth quarter.
Based on these trends, PPG Industries expects generally consistent quarterly sales trends on a sequential comparison basis in the fourth quarter. The company projects fourth-quarter earnings per share in the range of $1.03-$1.13.
The company also expects to deploy roughly $1 billion in the fourth quarter on acquisitions and share repurchases.
Price Performance
PPG Industries has underperformed the industry over the past year. The company’s shares have moved down around 13.1% compared with roughly 11.5% decline recorded by the industry.
Zacks Rank & Stocks to Consider
PPG Industries currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked stocks worth considering in the basic materials space include Methanex Corporation (MEOH - Free Report) , KMG Chemicals, Inc. and CF Industries Holdings, Inc. (CF - Free Report) , each carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have gained around 12% over the past six months.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. The company’s shares are up roughly 14% over the past six months.
CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have gained around 29% over the past six months.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>