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What Could Drive PPG Industries’ Revenue Growth in Q2 2018?

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PPG’s revenue expectations for Q2 2018

Wall Street expects PPG Industries (PPG) to post revenue of $4.11 billion in its upcoming Q2 2018 earnings release. That represents an increase of 8.1% over Q2 2017 when it reported revenues of $3.8 billion. Its peers Sherwin-Williams (SHW) and Axalta Coating Systems (AXTA) are projected to grow 25.1% and 12.6%, respectively. RPM International’s (RPM) revenue is expected to grow 6%.

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What could drive up PPG’s revenue?

PPG’s projected revenue growth in Q2 2018 could be driven by acquisition revenue. The revenue from ProCoatings and Crown Group will help increase its revenue growth. But the divestiture of PPG Glass could have an adverse impact.

PPG has increased the prices of several of its products, which could help drive up its revenues. It has also won several new business contracts with its existing clients and increased their supply portfolios.

PPG and Home Depot (HD) extended their partnership to sell PPG’s Olympic brand stains in more than 2,000 locations. However, Lowe’s (LOW) announced that it would no longer sell Olympic brand paints and stains in its stores. The effect could be seen more in the third quarter. PPG says LOW accounted for less than $300 million in annual revenues.

On the other hand, the strong US dollar against a basket of currencies could have an adverse impact. The dollar has gained 5% during the quarter. However, it might not have a big impact this quarter due to PPG’s currency hedge.

In the next part, we’ll look at analysts’ earnings expectations for PPG in Q2 2018.

Investors can indirectly hold PPG by investing in the iShares Edge MSCI Multifactor Materials ETF (MATF), which has invested 6.4% of its portfolio in PPG Industries as of July 16.

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