PPG Industries Inc.
) is scheduled to report its fourth quarter and full-year 2011
results before the market opens on Thursday, January 19. The Zacks
Consensus Estimate for the quarter is $1.28 per share, representing
a year-over-year growth of 2.67%.
With respect to earnings surprises, the company outdid the Zacks
Consensus Estimate in the trailing four quarters. This is reflected
in the average earnings surprise of 5.40%, with positive surprises
in all the four quarters.
Previous Quarter Performance
PPG's third-quarter earnings per share came in at $1.96, beating
the Zacks Consensus Estimate by 3 cents and ahead of the year-ago
earnings of $1.58 per share
The revenue in the quarter increased by 11% to $3.8 billion from
the year-ago quarter of $3.5 billion, slightly ahead of the Zacks
Consensus Estimate of $3.89 billion. The increase was attributable
to improved demand, higher pricing in each of its coatings
business, successful cost reduction initiatives and a gradual
industrial recovery worldwide, partly offset by rising raw material
The company did not provide any guidance for earnings per share,
but it expectsnormal seasonal fourth quarter patterns to occur. The
company also anticipates further pricing gains in every segment.
PPG continues to work on initiatives to deploy its cash to grow
The company also stated at its analyst day in December 2011 that
its earnings per share will be down by 8 cents to 14 cents per
share in the fourth quarter of 2011 due to floods in Thailand,
which affected its optical products. However, PPG does not see this
impacting 2012 so much and expects very little impact on earnings
in that year
PPG remains optimistic for the year 2012 and announced at its
analyst day that its growth will be based on innovation, cost and
supply chain management, as well as continuing disciplined cash
Agreement of Estimate Revisions
In the past 30 days, 2 analysts made downward revisions for the
fourth quarter and fiscal 2011, with no upward revisions.
Magnitude of Estimate Revisions
In the last 30 days, the Zacks Consensus Estimate dropped by 4
cents to $1.28 per share for the fourth quarter and by 3 cents to
$6.78 per share for fiscal 2011.
Over the 90-day period, the Zacks Consensus Estimate plunged 19
cents for the fourth quarter and 12 cents for fiscal 2011.
PPG's Performance Coatings and Specialty products have
demonstrated sound growth over the past few quarters and we expect
this trend to continue in the fourth quarter of 2011. Better
pricing is another indicator that the company will perform
PPG also has a strong cash position, and it intends to continue
to utilize cash on earnings growth initiatives, and has also
returned cash back to its shareholders in the form of uninterrupted
dividend pay outs.
However, raw material costs have been a matter of concern for
PPG's earnings. Though the raw material costs have shown a
moderating trend, the price of its primary raw material titanium
dioxide (TiO2) has been escalating. We believe that PPG's
significant presence in the U.S. construction, European
architectural and global auto, appliance and industrial coating
markets exposes it to substantial headwinds.
In view of the above stated reasons, we maintain short-term (1
to 3 months) Hold rating and a long-term (6 months) Neutral
PPG faces stiff competition from the DuPont Performance Coatings
EI DuPont de Nemours & Co.
) and BASF Coatings AG.
DU PONT (
) DE (
): Free Stock Analysis Report
PPG INDS INC (
): Free Stock Analysis Report
To read this article on Zacks.com click here.