12 Jan

What to Expect from PPG Industries’ Revenue Growth in 4Q17

WRITTEN BY Peter Neil

Revenue expectations

As of January 11, 2018, analysts expect PPG Industries (PPG) to post revenues of $3.66 billion in 4Q17—an increase of 3.10% on a year-over-year basis. In 4Q16, PPG Industries reported revenues of $3.50 billion. In the first three quarters in 2017, PPG Industries had two good quarters when it beat analysts’ estimates and one quarter when it missed analysts’ estimates.

What to Expect from PPG Industries’ Revenue Growth in 4Q17

PPG Industries’ revenues could increase

Good organic growth could help PPG Industries’ expected revenue increase. Higher pricing could be one of the major reasons. PPG Industries raised the prices for part of its portfolio due to increased raw material costs. Earlier, PPG Industries wasn’t able to pass on the price increase to the customer. Positive growth in construction, housing, and the automotive industry is expected to increase the volumes. Recovering from the hurricane damage could make up for the losses it incurred in 3Q17.

PPG Industries’ revenues will be impacted negatively due to the exit of the remaining glass business. In 4Q16, the glass business reported $80 million. However, PPG Industries’ acquisition of Crown Group is expected to cover up the void created by the glass business. PPG Industries also expects a favorable currency situation due to continued weakness in the US dollar, which could help improve its revenues.

Investors can hold PPG Industries indirectly by investing in the iShares U.S. Basic Materials ETF (IYM). IYM has invested 4.50% of its portfolio in PPG Industries. The fund also provides exposure to DowDupont (DWDP), Monsanto (MON), and LyondellBasell (LYB) with weights of 26.10%, 7.80%, and 5.50%, respectively, as of January 11, 2018.

Next, we’ll discuss analysts’ earnings expectations for PPG Industries in 4Q17.

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