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PPG Industries' (PPG) Earnings & Sales Lag Estimates in Q1
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PPG Industries Inc. (PPG - Free Report) recorded net income of $243 million or $1.02 per share in first-quarter 2020, down from the year-ago quarter’s profit of $312 million or $1.31 per share.
Barring one-time items, adjusted earnings were $1.19 per share in the reported quarter, down 13.8% from $1.38 logged in the year-ago quarter. Moreover, the figure lagged the Zacks Consensus Estimate of $1.20.
Net sales were down 6.8% year over year to $3,377 million. The figure lagged the Zacks Consensus Estimate of $3,453 million. Unfavorable currency swings affected net sales by more than 2%. Sales volumes fell 8% year over year.
PPG Industries, Inc. Price, Consensus and EPS Surprise
Performance Coatings: Net sales in the segment amounted to roughly $2 billion in the first quarter, down 4.7% year over year. Sales volume in the segment declined around 6%. Unfavorable foreign currency translation lowered net sales by 2%.
Segment income declined 8.4% year over year to $272 million. Reduced sales volume associated with the coronavirus pandemic and unfavorable foreign currency translation were partly offset by higher selling prices, cost mitigation measures and restructuring initiatives.
Industrial Coatings: Sales in the segment totaled around $1.4 billion, down 9.7% from the prior-year quarter’s figure. The benefits of slightly higher selling prices were offset by an 11% decline in sales volume. Also, unfavorable foreign currency translation lowered sales by around 2% on a year-over-year basis.
Net income in the segment totaled $181 million, down 16.9% year over year. Reduced sales volume due to customer shutdowns associated with the coronavirus pandemic were partly offset by modestly higher selling prices, cost mitigation measures and restructuring cost savings. Unfavorable currency impact was roughly $5 million.
Financial Position
As of Mar 31, 2020, PPG Industries had cash and cash equivalents of $1,886 million, up 140.5% year over year. Long-term debt rose 2.7% year over year to $4,751 million.
Outlook
Going forward, the company expects to achieve higher restructuring savings of $80-$90 million for 2020.
PPG Industries expects total sales volume for the second quarter to be down 30-35%. Moreover, it anticipates corporate expenses of $45-$50 million and net interest expenses of $35-$40 million for the second quarter.
Customer demand levels are projected to remain significantly impacted, with declines continuing in the automotive original equipment manufacturer, automotive refinish and aerospace coatings businesses. Further, the company noted that in businesses, including packaging coatings, do-it-yourself architectural coatings, long-cycle protective coatings and military products, demand has been slightly affected by the virus crisis.
PPG Industries has withdrawn all of its earlier communicated sales and earnings guidance for 2020 due to increased level of uncertainties over global economic demand.
Price Performance
Shares of the company have declined 18.1% in the past year compared with the 36.9% decline of the industry.
Zacks Rank & Stocks to Consider
PPG Industries currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Barrick Gold Corporation (GOLD - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Kinross Gold Corporation (KGC - Free Report) .
Barrick Gold currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 60.8% for 2020. The company’s shares have gained 112.7% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Franco-Nevada has a projected earnings growth rate of 19.2% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 92.4% in a year.
Kinross has a projected earnings growth rate of 50% for 2020. The company’s shares have surged 117.5% in a year. It currently has a Zacks Rank #2.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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PPG Industries' (PPG) Earnings & Sales Lag Estimates in Q1
PPG Industries Inc. (PPG - Free Report) recorded net income of $243 million or $1.02 per share in first-quarter 2020, down from the year-ago quarter’s profit of $312 million or $1.31 per share.
Barring one-time items, adjusted earnings were $1.19 per share in the reported quarter, down 13.8% from $1.38 logged in the year-ago quarter. Moreover, the figure lagged the Zacks Consensus Estimate of $1.20.
Net sales were down 6.8% year over year to $3,377 million. The figure lagged the Zacks Consensus Estimate of $3,453 million. Unfavorable currency swings affected net sales by more than 2%. Sales volumes fell 8% year over year.
PPG Industries, Inc. Price, Consensus and EPS Surprise
PPG Industries, Inc. price-consensus-eps-surprise-chart | PPG Industries, Inc. Quote
Segment Highlights
Performance Coatings: Net sales in the segment amounted to roughly $2 billion in the first quarter, down 4.7% year over year. Sales volume in the segment declined around 6%. Unfavorable foreign currency translation lowered net sales by 2%.
Segment income declined 8.4% year over year to $272 million. Reduced sales volume associated with the coronavirus pandemic and unfavorable foreign currency translation were partly offset by higher selling prices, cost mitigation measures and restructuring initiatives.
Industrial Coatings: Sales in the segment totaled around $1.4 billion, down 9.7% from the prior-year quarter’s figure. The benefits of slightly higher selling prices were offset by an 11% decline in sales volume. Also, unfavorable foreign currency translation lowered sales by around 2% on a year-over-year basis.
Net income in the segment totaled $181 million, down 16.9% year over year. Reduced sales volume due to customer shutdowns associated with the coronavirus pandemic were partly offset by modestly higher selling prices, cost mitigation measures and restructuring cost savings. Unfavorable currency impact was roughly $5 million.
Financial Position
As of Mar 31, 2020, PPG Industries had cash and cash equivalents of $1,886 million, up 140.5% year over year. Long-term debt rose 2.7% year over year to $4,751 million.
Outlook
Going forward, the company expects to achieve higher restructuring savings of $80-$90 million for 2020.
PPG Industries expects total sales volume for the second quarter to be down 30-35%. Moreover, it anticipates corporate expenses of $45-$50 million and net interest expenses of $35-$40 million for the second quarter.
Customer demand levels are projected to remain significantly impacted, with declines continuing in the automotive original equipment manufacturer, automotive refinish and aerospace coatings businesses. Further, the company noted that in businesses, including packaging coatings, do-it-yourself architectural coatings, long-cycle protective coatings and military products, demand has been slightly affected by the virus crisis.
PPG Industries has withdrawn all of its earlier communicated sales and earnings guidance for 2020 due to increased level of uncertainties over global economic demand.
Price Performance
Shares of the company have declined 18.1% in the past year compared with the 36.9% decline of the industry.
Zacks Rank & Stocks to Consider
PPG Industries currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Barrick Gold Corporation (GOLD - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Kinross Gold Corporation (KGC - Free Report) .
Barrick Gold currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 60.8% for 2020. The company’s shares have gained 112.7% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Franco-Nevada has a projected earnings growth rate of 19.2% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 92.4% in a year.
Kinross has a projected earnings growth rate of 50% for 2020. The company’s shares have surged 117.5% in a year. It currently has a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>