PPG Industries’ new acquisition
On July 20, 2017, PPG Industries (PPG) announced that it has entered into a definitive agreement to acquire The Crown Group. However, PPG didn’t disclose the financial aspects of the transaction. PPG expects the deal to be completed in 3Q17.
PPG could integrate The Crown Group under its Industrial Coatings segment. The Crown Group specializes in applying coatings to manufactured parts and assembled parts catering to agriculture, automotive, construction, heavy truck, and alternative energy. Viktor Sekmakas, PPG’s executive vice president, said, “Crown is a leader in coatings application and this acquisition will enhance PPG’s ability to service its original equipment manufacturer (OEM) customers.”
PPG’s stock performance
PPG stock fell for the week ending on July 21, 2017. PPG announced its 2Q17 earnings on the same day. Its revenues fell short of analysts’ expectations. As a result, PPG fell 5.7% for the week and closed at $106.37. The massive fall in the stock price caused PPG to trade below the 100-day moving average price of $107.56, which marked a trend reversal. PPG’s relative strength index of 32 indicates that the stock might be temporarily heading towards an oversold situation. PPG has returned 12.3% on a year-to-date basis. However, analysts appear to be bullish on the stock with a target price of $115.64, which implies a return potential of 8.70%.
Investors can invest in PPG indirectly by investing in the Materials Select Sector SPDR Fund (XLB), which has invested 4.50% of its portfolio in PPG. The fund’s other holdings include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON) with weights of 12.20%, 12.0%, and 8.40%, respectively, as of July 21, 2017.
For a full analysis of PPG’s 2Q17 earnings, read Why Analysts Are Confident in PPG despite Its 2Q17 Revenue Miss.