Markets

PPG Industries (PPG) Gets DOE Funding to Develop Agilon

A generic image of a stock chart on a display
Credit: Shutterstock photo

PPG IndustriesPPG declared that the U.S. Department of Energy ("DOE") will provide funds to support a $1.14 million project. The project aims to develop new silica-based performance fillers for non-tread components which improve the fuel efficiency and performance of tires.

The fund is provided through the Office of Energy Efficiency and Renewable Energy's Vehicle Technologies Office. This project along with 35 other, will collectively receive $57 million for the emissions and petroleum consumption in passenger cars and light trucks.

PPG will develop reinforcing fillers for non-tread tire compounds by using Agilon performance silica technology. This will account for nearly half of the fuel-efficiency impact of a tire. The DOE project aims to enable a 2% increase in the fuel efficiency of tires with an initial focus on the non-tread component - the sidewall.

The objective is to cut energy loss through the sidewall, while maintaining or improving resistance to forces such as cracking, tearing and abrasion that lower quality of the tire. Another goal of the project is to understand, retain and improve the aging performance of tires as measured by crack growth resistance in an ozone environment.

Agilon performance silica is chemically-modified precipitated silica which holds the potential to improve product performance. When used in tire treads, it improves vehicle fuel efficiency, traction and treadwear by 5-10%. Agilon performance silica provides manufacturing benefits by improving throughput and reducing capital expenditures. It helps to save energy and reduces volatile organic compound (VOC) emissions.

PPG was one of the first manufacturers to pioneer synthetic precipitated silica products for use as reinforcing fillers in tire, industrial, footwear and silicone rubber applications; as microporous fillers in battery-separator applications; as thickening agents in coatings, adhesives and sealants; and as anti-caking, free-flow and carrier agents in food, feed and industrial applications.

PPG Industries underperformed the Zacks categorized Chemicals-Diversified industry over the past three months, affected by weak growth in global demand for its products amid a difficult global operating environment. The company's shares gained around 3.3% over this period, compared with roughly 7.5% gain recorded by the industry.

However, PPG Industries has a diversified business, both in terms of products offered and geographical presence. The company's strong presence in emerging regions has enabled it to deliver growth to shareholders by tapping opportunities there. PPG Industries is also taking steps to grow its business through acquisitions.

PPG Industries has announced certain restructuring measures to lower its cost structure globally. Special emphasis will be put on regions and end-use markets with the weakest business. The restructuring actions are expected to deliver $120-$130 million in annual savings, with $40-$50 million of savings expected to be realized in 2017.

PPG Industries also has an impressive record of returning cash to shareholders through dividends and share buybacks. The company returned nearly $1.5 billion to its shareholders in the form of dividend and share repurchases in 2016. The company also raised its quarterly dividend by 11% in 2016.

However, PPG Industries is exposed to unfavorable currency exchange translation, especially in emerging markets. The company continues to face macroeconomic challenges. It sees an uneven growth in emerging economies in 2017. The company is also exposed to volatility in raw materials and energy costs.

PPG Industries, Inc. Price and Consensus

PPG Industries, Inc. Price and Consensus | PPG Industries, Inc. Quote

PPG Industries currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked companies in the chemical space include Kronos Worldwide, Inc. KRO , Methanex Corporation MEOH and Albemarle Corporation ALB .

Kronos has an expected long-term growth of 5% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Methanex, also a Zacks Rank #1 stock, has an expected long-term growth of 15%.

Albemarle holds a Zacks Rank #2 (Buy) and has an expected long-term growth of 10%.

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?

Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

PPG Industries, Inc. (PPG): Free Stock Analysis Report

Methanex Corporation (MEOH): Free Stock Analysis Report

Albemarle Corporation (ALB): Free Stock Analysis Report

Kronos Worldwide Inc (KRO): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

MEOH ALB KRO PPG

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More