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PPG Industries (PPG) Earnings Preview

by | Apr 11, 2021

PPG Industries (PPG) with earnings on Thursday after the close with the Street looking for $1.55 on $3.68B in sales. Next quarter is guided to $2.03 and $4.05B while the FY is $7.38 and $16B. Shares have closed lower in four of the last five with a closing average of 2.5% and a max move of 4.7%. The current implied move is 4%. Shares are consolidating in a small flag under recent highs and back at VWAP from the February low. A move higher has a longer-term target out to $170. The $35.26B company trades 18X earnings, 2.55X sales, and 18.4X cash with a 1.45% yield. PPG makes paints and coatings for a variety of end-markets including industrial markets, consumer products, automotive parts, and aerospace. The company has seen some weakness during the pandemic from higher demand from DIY customers but growing demand for contractors and a resumption of industrial activity should be a tailwind for their coatings business in 2021. Aerospace volumes should also pick up again and be supportive of a longer-term outlook. Analysts have an average target for shares of $145 and a Street High $178. Wells Fargo raising estimates on 4/7 expecting strong double-digit sales growth through 2022 given strong underlying demand and stronger volume growth in architectural paints globally and momentum in industrial coatings. The firm also thinks recent deals will add over $1/share to EPS. BAML upgrading to Buy in January noting that customer concerns over automotive supply have led to an increased reliance on service, strengthening PPG’s pricing power. Short interest is 2.15%. Hedge fund ownership rose marginally in Q4.

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