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PPG Industries Stock Rose, Revenue Beat Analysts’ Estimate



PPG Industries’ revenue beat estimates

PPG Industries (PPG) announced its 3Q17 earnings on October 19, 2017, before the markets opened. PPG Industries reported revenue of $3.77 billion—an increase of 3.0% on a YoY (year-over-year) basis. The growth is determined on a continuing operation basis. In 3Q16, PPG Industries reported $3.66 billion on a continuing operation basis. PPG Industries’ revenue beat analysts’ estimate of $3.75 billion.

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PPG Industries’ revenue growth was influenced by higher volumes, favorable currency, higher pricing, and acquisition revenue. The volumes grew close to 1% on a YoY basis. The volumes slowed down after hurricanes impacted the US. There was also an earthquake in Mexico. During the first two months of the quarter, the volumes grew 1.5%. Weakness in the US dollar helped the sales to the extent of $65 million in 3Q17. Both of PPG Industries’ reporting segments reflected growth.

Stock price reaction

Wall Street reacted positively to PPG Industries’ 3Q17 results. The stock rose ~1.30% and closed at $114.31. On the same day, Sherwin-Williams (SHW), RPM International (RPM), and Axalta (AXTA) rose 0.90%, 0.25%, and 1.50%, respectively. On a YTD basis, the stock has returned 20.0%.

Michael McGarry, PPG Industries’ chairman and CEO, said “We have continued to aggressively manage our costs, and have secured initial selling price increases with only a portion of these increases realized during the quarter. Also, while we still have more work to do to improve our overall organic growth rate, we are continuing to make measurable headway in several areas, including our Industrial Coatings segment which grew sales volumes by more than 3 percent year-over-year and in our U.S. architectural coatings company-owned stores where same-store sales growth was trending above 6 percent prior to the hurricanes.”

Investors can hold PPG Industries indirectly by investing in the Vanguard Materials ETF (VAW). VAW has invested 3.20% of its portfolio in PPG Industries as of October 19, 2017.


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