PPG Industries Inc.
) hit a new 52-week high of $190.07 on Dec 31 and eventually
closed at $189.66.
Year-to-date, PPG Industries' share price recorded a healthy
return of 42.30%. The company's long-term estimated earnings per
share (EPS) growth rate is 8.5%. PPG Industries' average volume
of shares traded over the last three months was approximately
What is Driving PPG industries Up?
PPG Industries outshone earnings expectations in the third
quarter of 2013 on the back of improving demand trends across
major markets, cost reduction measures and continued strong
performance of its coatings business. Strength across aerospace
and automotive original equipment manufacturer (OEM) coatings
supported the results.
Excluding one-time items, the company posted earnings from
continuing operations of $2.44 a share in the quarter, surpassing
the Zacks Consensus Estimate of $2.34. The adjusted earnings
exclude one-time items including restructuring and acquisition
Revenues climbed roughly 17% year over year to $3,980 million,
outpacing the Zacks Consensus Estimate of $3,960 million. Healthy
results in the coatings business was fueled by gains across
automotive OEM coatings, automotive refinish and aerospace.
PPG Industries, which currently carries a Zacks Rank #2 (Buy),
has an aggressive cost cutting and restructuring strategy. Cost
savings from these restructuring efforts will act as a positive
catalyst for the company. PPG Industries expects its European
restructuring program to fetch cost savings of $70 million to $80
million in 2013.
Separately, the company's board, in July 2013, approved a new
$102 million restructuring program focused on achieving cost
synergies associated with the North American architectural
coatings business takeover. The restructuring program will also
include actions for businesses grappling with challenging market
conditions, especially protective and marine coatings and certain
European businesses such as architectural coatings and fiber
PPG Industries also has an impressive record of returning cash to
shareholders through dividends and share buybacks. The company
has a rich history of raising dividends.
PPG Industries expects recovery across its end markets to
continue. Majority of economic sectors in North America, one of
its largest regions, are expected to exhibit improvement due to
increasing industrial and chemical production activity. The
company is seeing strength in the North American automotive OEM
and aerospace markets.
PPG Industries is also taking several initiatives to grow its
business inorganically. PPG Industries, in April 2013, closed the
acquisition of the North American architectural coatings business
of Dutch paints company
) for $1.05 billion. This marked the second-largest acquisition
in the company's history. The company expects to achieve $200
million in annual synergies from the buyout within the first
three full years. Moreover, in an effort to strengthen its
position in the aerospace industry, PPG Industries has acquired
specific assets of privately-held specialty coatings company Deft
Other Stocks to Consider
Other players in the chemical industry worth considering are J
ohnson Matthey plc
). While Johnson Matthey holds a Zacks Rank #1 (Strong Buy),
Innospec retains a Zacks Rank #2 (Buy).
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PPG INDS INC (PPG): Free Stock Analysis
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