) is set to release its fourth-quarter 2013 results before the
opening gong on Jan 16.
In the last quarter, the Pennsylvania-based company delivered a
4.3% positive earnings surprise on the heels of improving demand
trends across major markets, cost reduction measures and
continued strong performance of its coatings business. Let's see
how things are shaping up for this announcement.
Factors to Consider this Quarter
PPG Industries is expected to see a seasonally weaker fourth
quarter than the third across several of its end markets
including architectural coatings. However, it should gain from
continued improvement in global demand trends.
We expect healthy momentum across aerospace and automotive OEM
markets coupled with PPG Industries' cost containment measures
through its restructuring program to lend support to earnings in
the fourth quarter. The company's restructuring measures are
expected to fetch meaningful cost savings this year.
Moreover, PPG Industries will gain from its acquisition of North
American architectural coatings business of Dutch paints company
). The acquisition has reinforced its branded paint product
offerings and scale in the North American architectural paint
market. The company has already achieved more than half of the
expected synergies of $200 million from the acquisition.
However, a weak European market may weigh on PPG Industries'
results in the December quarter. The company continues to face a
challenging demand environment in the region with volumes
remaining in the negative territory. Moreover, some of the key
end markets such as non-residential construction, protective and
marine coatings and EMEA architectural coatings remain sluggish.
Our proven model does not conclusively show that PPG Industries
is likely to beat the Zacks Consensus Estimate in the fourth
quarter. That is because a stock needs to have both a positive
(Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for
this to happen. That is not the case here, as you will see below.
ESP for PPG Industries is 0.00%. This is because both the Most
Accurate Estimate and the Zacks Consensus Estimate are pegged at
Zacks Rank #2 (Buy):
PPG Industries' Zacks Rank #2 lowers the predictive power of ESP.
The Zacks Rank #2 when combined with an ESP of 0.00% makes
surprise prediction difficult. We caution against stocks with
Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings
announcement, especially when the company is seeing negative
estimate revisions momentum.
Other Stocks to Consider
Here are some other chemical companies you may want to consider
as our model shows they have the right combination of elements to
post an earnings beat this quarter:
Compass Minerals International Inc.
) has earnings ESP of +7.69% and holds a Zacks Rank #2 (Buy).
Koppers Holdings Inc.
) has earnings ESP of +1.61% and carries a Zacks Rank #2
AKZO NOBEL NV (AKZOY): Get Free Report
COMPASS MINERLS (CMP): Free Stock Analysis
KOPPERS HOLDNGS (KOP): Free Stock Analysis
PPG INDS INC (PPG): Free Stock Analysis
To read this article on Zacks.com click here.