PPG Industries’ stock performance
PPG Industries’ (PPG) stock price has seen gradual growth in 2017 so far. On a year-to-date basis, the stock has risen 22.3% and has outperformed the broad-based SPDR S&P 500 ETF (SPY), which has risen 16.4%. PPG peers Sherwin-Williams (SHW) and Axalta (AXTA) also outperformed PPG with returns of 45.2% and 30.8%, respectively, while RPM International (RPM) has fallen 3.3%.
PPG’s stock price gains came on the back of better-than-expected earnings in 1Q17 and 3Q17 and lower-than-expected earnings in 2Q17. Positive business developments like the company’s exit from its glass business to focus on its coatings and painting business and the acquisition of Crown Group helped stock prices rise. However, PPG stock suffered a setback due to a failed bid to acquire Akzo Nobel.
The biggest concern for PPG is that its top line has remained range-bound, and PPG needs to address this issue urgently. PPG’s commitment to spend $2.5 billion to $3.5 billion by the end of 2018 for acquisitions and share repurchases could address the issue and drive growth.
Moving average trend
PPG stock has traded above its 100-day moving average price so far in 2017 except for a short period at the beginning of the year and after the announcement of its 2Q17 earnings. But PPG reversed the trend with better 3Q17 earnings and is now trading approximately 6.9% above the 100-day moving average price of $109.80, reflecting an upward trend in the stock. PPG’s 14-day relative strength index level of 65 indicates that the stock is neither overbought nor oversold.
In this series, we will analyze PPG’s debt position, ability to service its debts, and more.