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PPG Industries (PPG)
Even
with the weakness in Europe,
the coatings giant PPG is still seeing strong growth in the U.S. and
other
emerging markets, propelling it to new 52 week highs. A majority of PPG’s
business is derived from OEM automotive coatings and coating
innovations since
1924. Being that auto
and truck sales have been relatively
strong in recent months and the trends seem to be improving PPG may stand to
benefit further from increased production of not just autos, but all
types of
manufacturing that requires their coatings. They may be the automotive derivative trade you haven’t thought of.
PPG
was recently featured in our Investment
Ideas column
for its healthy dividend yield and stable growth.
Company
Description & Developments
Headquartered in Pittsburgh, Pa., PPG Industries is a leading
diversified global
manufacturer of paints, coatings, optical products specialty materials
and chemicals
as well as glass and fiber glass. They
cater to a full spectrum of customers in industrial, transportation,
consumer
products and construction markets.
PPG has more than 140 manufacturing facilities and equity
affiliates that span
more than 60 countries around the world. On April 19th the
coatings company reported
solid results the beat Zacks Consensus estimates by 2 cents.
Financial Profile
PPG is a large-cap (15.41 billion) company that is trading at about
12.8 times forward
(expectations for next quarter) earnings. They have a PEG ratio of 1.05
and
offer a dividend yield of 2.26% at current share values. PPG
became a Zacks Rank 1 strong buy
on April 11th ahead of their strong results on April 19th.
Quarter
over quarter sales were up 6.7%
compared to (fiscal) Q42011 with total sales of roughly 14.89 billion
in FY2011.
PPG earnings jumped from a $4.63 in profit during FY2010 to $6.87 in
FY2011. PPG is expected to earn $7.88 in
FY2012 according to the Zacks Consensus Estimate.
Earnings Estimates
PPG Industries has surprised analysts to the upside for the past 4
quarters +
in a row with an average of 2.3% in the past year.
Expectations are for PPG to generate
$2.35 in income this quarter. Of the 14 analysts who cover
PPG, the
consensus is for the company to grow earnings by 16% in the current
year (FY2012)
and roughly 10% in FY2013. In terms of the magnitude of
analyst estimate trends, we are seeing all of
the consensus estimates higher than they were 90 days ago for the
current and
next quarters as well as FY2012 and FY2013.
Being a relatively stable company, there is currently a 1%
upside surprise potential
for the next report given the most recent upgrades and estimate
revision.
Market Performance &
Technicals
PPG, like many of our momentum Rank-Buy stocks has been moving in a
strong
bullish channel since late 2011. There
was a bullish crossover of the 50 day moving average above the 200 day.
PPG
has not only maintained its position
above those averages, but is solidity above its 50 and 200 day moving
averages which
currently stand at $94.28 and $84.95 respectively. Look for
both of those levels as points of
support, but a breach of the 200 day average may indicate a change in
trend.
PPG
has still managed to exceed the
S&P 500’s performance by 6% in the past year and over 8% in the
past 3
months. After the rally following
earnings, PPG now leads the index by almost 10% over the last 30 days.
Jared
A Levy is the
Momentum Stock Strategist for Zacks.com. He is also the Editor in
charge of the
market-beating Zacks
Whisper Trader Service.
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