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PPG Industries (PPG) to Post Q3 Earnings: What's in Store?

PPG Industries Inc. PPG is set to release third-quarter 2020 results after the closing bell on Oct 19. The paint giant’s results will likely reflect the benefits of its cost-control initiatives and improved end-market demand.

PPG Industries beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missed twice, the average surprise being roughly 13.1%. The company posted an earnings surprise of around 52.3% in the last reported quarter.

Shares of the company are up 13.1% over the past year compared with its industry’s 7.9% rise.

 


 

Let’s see how things are shaping up for this announcement.

Zacks Model

Our proven model predicts an earnings beat for PPG Industries this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for PPG Industries is +7.53%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at $1.71. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PPG Industries currently carries a Zacks Rank #2.

What do the Estimates Say?

PPG Industries envisions its total sales volume for the third quarter to be down around 5% year over year.

The Zacks Consensus Estimate for revenues for PPG Industries for the to-be-reported quarter stands at $3,587 million, suggesting an expected year-over-year decline of 6.2%.

The Zacks Consensus Estimate for revenues for the company’s Industrial Coatings unit is currently pegged at $1,373 million, calling for a decline of around 9.3% year over year. The consensus mark for revenues for the Performance Coatings segment is pegged at $2,196 million, indicating a roughly 5% year-over-year decline.

Factors at Play

The company’s third-quarter results are expected to have benefited from higher volumes in its global architectural coatings businesses and improved demand in several end-use markets. PPG Industries is seeing strength in global architectural coatings and packaging coatings businesses along with recovering demand in general industrial coatings and automotive original equipment manufacturer businesses.

PPG Industries is also actively managing costs and is also implementing appropriate pricing actions amid a challenging business environment. It remains focused on improving its cost structure and recovering margins through price increases. Benefits of these initiatives might reflect on the company’s bottom line in the September quarter. PPG Industries expects $30-$35 million in cost savings from its restructuring programs in the third quarter.

The company is also taking steps to grow business inorganically through value-creating acquisitions. Strategic buyouts (including Industria Chimica Reggiana and Dexmet) are likely to have contributed to its sales in the third quarter.  

However, currency translation headwinds are likely to have exerted some pressure on the company’s top line in the quarter to be reported. PPG Industries expects currency translation headwinds to impact net sales by $50-$60 million in the third quarter.

PPG Industries, Inc. Price and EPS Surprise

 

PPG Industries, Inc. Price and EPS Surprise

PPG Industries, Inc. price-eps-surprise | PPG Industries, Inc. Quote

 

Other Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Agnico Eagle Mines Limited AEM, scheduled to release earnings on Oct 28, has an Earnings ESP of +14.25% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newmont Corporation NEM, scheduled to release earnings on Oct 29, has an Earnings ESP of +0.97% and carries a Zacks Rank #2.

Eastman Chemical Company EMN, scheduled to release earnings on Oct 29, has an Earnings ESP of +1.97% and carries a Zacks Rank #3.

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PPG Industries, Inc. (PPG): Free Stock Analysis Report
 
Newmont Corporation (NEM): Free Stock Analysis Report
 
Eastman Chemical Company (EMN): Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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