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What Could Drive PPG Industries’ Revenue in 1Q18?

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Apr. 12 2018, Published 10:07 a.m. ET

PPG’s revenue expectations for 1Q18

PPG Industries (PPG) is expected to post revenues of $3.7 billion in 1Q18, an increase of 4.2% on a year-over-year basis. In 1Q17, it reported revenues of $3.6 billion. Its peers Sherwin-Williams (SHW) and Axalta (AXTA) are projected to grow 43% and 13.5%, respectively. RPM International (RPM) in its latest quarter reported a revenue increase of 7.8%.

PPG’s first-quarter revenues since 2014 have been hovering between $3.57 and $3.64, which is almost flat. However, if PPG manages to beat the estimates, it would be the best in the past five years. From 2013, PPG’s first-quarter revenues have grown at a CAGR (compound annual growth rate) of a mere 2.2%.

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The projected growth is expected to be influenced by the price hikes of its products over the past two quarters. During 1Q18, PPG acquired ProCoatings, a wholesale dealer located in the Netherlands. The deal is expected to contribute to PPG’s revenue growth. Revenue from the acquired Crown Group will also add to PPG’s revenue. The other important factor that could influence PPG’s revenue growth is favorable foreign currency. In 1Q18, the dollar index, which measures the dollar against a basket of currencies, fell 2.3%. PPG expects the architectural revenue to be adversely impacted by $20 million due to the Easter holiday.

Investors can hold PPG Industries indirectly by investing in the iShares U.S. Basic Materials ETF (IYM). IYM has invested 4.3% of its portfolio in PPG Industries as of April 11, 2018.

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