On Jan 17, we retained our Neutral recommendation on
). While it should benefit from strength across North American
automotive OEM and aerospace markets, we prefer to tread with
caution factoring in a still soft European market and raw
material cost pressure.
The coatings giant's adjusted earnings for fourth-quarter
2013, reported on Jan 16, topped the Zacks Consensus Estimate.
Reported profit jumped on strength in the company's coatings
business and its cost management initiatives. Revenues rose by
double digits and beat expectations. Healthy momentum across
aerospace and automotive markets aided the results. PPG
Industries sees favorable market conditions across these
end-markets in 2014.
PPG Industries has a diversified business, both in terms of
products offered and geographical presence. It has a leading
position in several paints and coatings end markets.
PPG Industries is taking steps to grow its business
inorganically by making a number of acquisitions. The acquisition
) North American architectural coatings business has reinforced
its branded paint product offerings and scale in the North
American architectural paint market.
Moreover, PPG Industries is pursuing a $102 million business
restructuring focused on achieving cost synergies associated with
the North American architectural coatings business takeover. The
company also has an impressive record of returning cash to
shareholders through dividends and share buybacks. It has
returned $1.35 billion to its shareholders in form of dividends
and share repurchases in 2013.
However, PPG Industries may face macroeconomic challenges
going ahead. While the company had a healthy fourth quarter with
improving trends in Europe, it may continue to face softness in
the region with weak economic activity and a still challenging
Moreover, PPG Industries remains exposed to raw material cost
pressure. Some of the key end markets such as non-residential
construction, protective and marine coatings and European
architectural coatings remain sluggish.
Other Stocks to Consider
Other companies in the chemical industry worth considering
L'Air Liquide SA
Johnson Matthey plc
) with both carrying a Zacks Rank #1 (Strong Buy).
AIR LIQUIDE-ADR (AIQUY): Get Free Report
AKZO NOBEL NV (AKZOY): Get Free Report
JOHNSON MATTHEY (JMPLY): Get Free Report
PPG INDS INC (PPG): Free Stock Analysis
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