), a global supplier of protective and decorative coatings, is
scheduled to report its first-quarter 2012 results before the
opening gong on Thursday, April 19. The current Zacks Consensus
Estimate for the quarter is $1.79 per share, representing an
estimated year-over-year growth of 27.62%.
The Pennsylvania-based company recently unfurled its guidance
for the first quarter. The company expects adjusted earnings to be
in the band of $1.75 to $1.80 a share. After including
restructuring expenses and costs associated with acquisition and
environmental remediation, it expects earnings to be in the range
of 2 to 7 cents per share.
PPG industries expect to incur pretax restructuring charge of
$208 million in the quarter. The company said that the
restructuring efforts are a part of its strategy to be at par with
its competitors which includes the DuPont Performance Coatings
EI DuPont de Nemours & Co.
) and BASF Coatings AG.
With respect to earnings surprises, PPG Industries beat the
Zacks Consensus Estimates in the trailing four quarters and we
expect this impressive trend to continue into the first quarter.
The company has delivered an average positive earnings surprise of
3.14% over the past four quarters, implying that it has beaten the
Zacks Consensus Estimate by that measure.
Fourth Quarter Revisited
PPG Industries' fourth quarter earnings of $1.39 a share
exceeded the Zacks Consensus Estimate of $1.28. The company
delivered record earnings in the quarter driven by higher revenues
and cost cutting initiatives.
Revenues went up 4% year over year to $3.52 billion, squeaking
past the Zacks Consensus Estimate. The company saw growth in each
of its coatings businesses in the quarter.
Revenues in the Performance Coatings segment rose 3% year over
year while the Industrial Coatings business registered a growth of
7%. Sales from the Architectural Coatings division climbed 5% in
the quarter. Optical and Specialty Materials revenues fell 3%, hit
by supply outage resulting from floods in Thailand. Revenues from
the Commodity Chemicals segment edged up 0.5% while sales from the
Glass unit fell modestly in the quarter.
Estimate Revisions Trend
Estimates for the March quarter are clearly on the positive side
reflecting a comprehensive directional agreement. Out of 9 analysts
coving the stock, 8 have raised their forecasts over the past month
with none moving in the opposite direction. Over the past week,
none have moved in the either direction.
For fiscal 2012, estimates reflects strong bullish sentiment
with 10 analysts (out of 14) having hiked their estimates over the
last 30 days without any reverse movements. Over the past 7 days, 2
analysts have lifted their forecasts with none lowering their
Given the sheer directional consensus, estimate for the first
quarter has surged by 36 cents over the past month while remaining
stationary (at $1.79 a share) over the past week. For fiscal 2012,
estimate has shot up by 8 cents and 39 cents over the last 7 and 30
days, respectively. The current Zacks Consensus Estimate for fiscal
2012 is $7.68, representing an estimated year-over-year growth of
PPG Industries' Performance Coatings and Specialty products
businesses have demonstrated sound growth over the past few
quarters and we expect this trend to continue in the first quarter.
Better pricing and lower costs of natural gas are also expected to
aid to the results.
While the company anticipates the European market to remain
challenging, it expects the U.S. economy to recover moderately. It
also expects emerging markets to witness higher growth rates
compared with its developed markets in the first quarter.
PPG Industries has a strong cash position, and continues to
utilize cash on earnings growth initiatives. Moreover, the company
has been returning cash to its shareholders in the form of
uninterrupted dividend pay outs. It also expects to deploy its
strong cash position for sustained growth.
However, raw material costs have been a matter of concern for
the company's earnings. Although raw material costs have shown a
moderating trend, the price of the company's primary raw material
TiO2 has been escalating. We also believe that PPG's significant
presence in the U.S. construction, European architectural and
global auto, appliance and industrial coating markets exposes it to
We currently have a long-term Neutral recommendation on PPG
Industries. The stock currently holds a Zacks #1 Rank, which
translates into a short-term "Strong Buy" rating.
DU PONT (
) DE (
): Free Stock Analysis Report
PPG INDS INC (
): Free Stock Analysis Report
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