• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Research
    • Markets & Technologies
    • Raw Materials
    • Top Companies
    • Directories
    • Jobs
    • Events
    • Microsites
    • More
  • Magazine
  • News
  • Research
  • Markets & Technologies
  • Raw Materials
  • Top Companies
  • Directories
  • Jobs
  • Events
  • Microsites
  • Current / Back Issues
    Features
    Business Corner
    Editorial
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Subscribe Now
    Advertise Now
    World Reports
    eBook
    Top Features
    Biocides Market Outlook - 2027

    Lab & Testing Equipment Directory

    Aerospace Coatings

    Resins Update

    Coatings World Q&A: Eileen Weber of allnex
    Breaking News
    Online Exclusives
    Distributor News
    Financial News
    Paint & Coatings Manufacturer News
    People In the News
    Price Increases
    Product News
    Raw Materials & Equipment
    Video Bites
    Suppliers News
    Live From Shows
    Top News
    What are You Reading this Week?

    Nippon Paint Automotive Americas Appoints Robert Angart CEO and President

    Sustainability, Economy are Focus of BCF’s Annual Conference

    Demand for Rhino Shield Increases

    ICP Receives ASC Innovation Award for Spray Foam That Meets Changing Environmental Regulations
    Top Companies report
    Market Research
    White Papers / Tech Papers
    Technical Papers
    Product Spec Sheets
    World Reports
    Adhesives and Sealants
    Aerospace Coatings
    Architectural Coatings
    Automotive Coatings
    Automotive Refinish
    Business Operation
    Color Trends & Forecast
    Construction Chemicals
    Corrosion Control
    Industrial Coatings
    Laboratory Equipment
    Marine Coatings
    Market Trends & Forecast
    Powder Coatings
    Production Equipment
    Radcure Coatings
    Special Purpose Coatings
    Wood Coatings
    "Green" Coatings

    Nippon Paint Automotive Americas Appoints Robert Angart CEO and President

    Demand for Rhino Shield Increases

    PPG Demos MOONWALK Refinish Paint Mixing System at Media Event

    Pylon Coatings Uses Polygiene Biomaster & Verimaster for Antimicrobial Surface Protection

    Powder Coatings Institute 2022 Scholarship Recipients Announced
    Additives
    Binders
    Pigments
    Solvents

    The Shepherd Color Company Announces New President and Commercial Segment Leaders

    Birla Carbon to Present Sustainable Carbon-based Solutions at PaintIndia 2022

    BTC Europe, NXTLEVVEL Biochem to Distribute Biobased & Biodegradable Solvents in Europe

    Nouryon Issues 2021 Sustainability Report

    BASF to Increase Prices for Select Polyalcohols in North and South America
    Company Capabilities
    Buyers Guide
    Distributor Guide
    Add New Company
    International Buyers Guide Companies
    Active Minerals

    W. R. Grace & Co.

    Clariant Additives

    Shepherd Color Company, The

    Pilot Chemical Company
    Industry Events
    Webinars
    Live From Show Event
    Top Events
    Southern Society for Coatings Technology Annual Meeting and Technical Conference

    UTECH Middle East/Africa Foam & Polyurethane Expo

    Surfex

    Middle East Coatings Show 2022

    ABRAFATI 2022
    Companies
    White Papers/Tech Papers
    Product Spec Sheets
    Equipment
    Literature/Brochures
    Videos
    International Buyers Guide Companies
    Active Minerals

    W. R. Grace & Co.

    Clariant Additives

    Shepherd Color Company, The

    Pilot Chemical Company
    • Magazine
      • Current / Back Issues
      • Features
      • Editorial
      • Business Corner
      • Digital Edition
      • eNewsletter Archive
      • Editorial Guidelines
      • Subscribe Now
      • Advertise Now
    • Breaking News
    • Directories
      • Buyers Guide
      • Distributor Guide
      • Corporate Capabilities
      • Trade Associations
      • Add Your Company
    • Markets & Technologies
      • Adhesives and Sealants
      • Aerospace Coatings
      • Architectural Coatings
      • Automotive Coatings
      • Automotive Refinish
      • Business Operation
      • Color Trends & Forecast
      • Construction Chemicals
      • Corrosion Control
      • Industrial Coatings
      • Laboratory Equipment
      • Marine Coatings
      • Market Trends & Forecast
      • Powder Coatings
      • Production Equipment
      • Radcure Coatings
      • Special Purpose Coatings
      • Wood Coatings
      • "Green" Coatings
    • Raw Materials
      • Additives
      • Binders
      • Pigments
      • Solvents
    • World Reports
      • Africa Report
      • India/Asia Pacific Report
      • China Report
      • Europe Report
      • Latin America Report
      • Market Research
      • Russian Report
    • Top Companies
    • Online Exclusives
    • Slideshows
    • Experts Opinions
    • Blog
    • eBook
    • Infographics
    • Videos
    • Podcasts
    • Whitepapers
    • Jobs
    • Microsites
      • Companies
      • White Papers/Tech Papers
      • Product Spec Sheets
      • Equipment
      • Literature/Brochures
      • Videos
    • Events
      • Industry Events
      • Live From Show Event
      • Webinars
    • About Us
      • About Us
      • Contact Us
      • Advertise With Us
      • Privacy Policy
      • Terms of Use
    Expert's Opinion

    Analyst Provides Key Takeaways After Mixed Results from PPG Industries

    Financial Strength vs. Lackluster Operations

    Analyst Provides Key Takeaways After Mixed Results from PPG Industries
    Related CONTENT
    • EPS
    • PPG Provides Money, Paint for Hungary Primary School Project
    • PPG Supports Coatings and Polymeric Materials at NDSU With $40G Donation
    • TCI Powder Coatings Hires Achitectural & Building Products Segment Manager
    • AkzoNobel Publishes Half-Year and Q2 2017 Results
    Kevin McCarthy, Chemicals Analyst, Vertical Research Partners09.06.17
    PPG Industries (PPG: Buy, $120 PT)
    Financial Strength vs. Lackluster Operations

    • We see more upside in the former vs. incremental downside in the latter. Well, it wasn’t quite the quarter we had bargained for. Adjusted 2Q EPS of $1.83 was in line with consensus, but belied volume deceleration and margin compression in both Performance Coatings and Industrial Coatings. Operationally, PPG is fighting several battles: pricing that lags rising raw material costs, foregone sales of industrial coatings in an effort to defend price, persistent volume pressure in architectural coatings in DIY channels, and deceleration of global auto OEM production, just to name a few. The upshot is that operating margin remains under pressure with net volume growth languishing near zero. Looking ahead, 3Q prospects frankly don’t look too much better, although we’re more optimistic on margin restoration by 4Q. We see far better news on the financial front. PPG shares are relatively inexpensive, the company has substantial dry powder, and we expect management to put it to use forthwith via resumption of meaningful share repurchases in 3Q against an authorization of $1.7bn or 6.1% of equity market capitalization. As a result, we believe residual risk to EPS is rather low, so we’re sticking with PPG shares on the pullback.

    • Our top 10 takeaways are: (1) sales of $3.81bn came in 1.1% below our $3.85bn; (2) EBIT of $650mn paled vs. our $670mn as margins compressed while volume growth stalled to flat from 1.9% in 1Q17; (3) earnings in both Performance Coatings and Industrial Coatings came in light, offset by lower than projected corporate expense due to a decline in variable comp; (4) PPG lost some business in Industrial in an effort to... 

    • Changes to our model: We decrease our 2017 EPS estimate by $0.22 to $6.00, including $1.60E for 3Q17. Drivers include lower projected sales at a lower operating margin, particularly in Industrial Coatings, partially offset by EPS accretion from the pending acquisition of Crown as well as more favorable FX. Likewise, we revised our 2018 EPS estimate lower to $6.45 from $6.60 for similar reasons.

    • We rate PPG shares Buy with a price target of $120. Our target suggests total upside potential of 14%, including an upgraded dividend yield of 1.7% based on PPG’s payout increase of 12.5% to $0.45 per quarter. PPG shares now trade at a 2018 P/E multiple of 16.5x, which represents a discount of 3.0x or 15% vs. the average of three US coatings peers (SHW, AXTA and RPM). Importantly, we estimate that this discount would nearly double pro forma for deployment of PPG’s excess capital vs. coatings peers. Our valuation of PPG is based on an average of two methodologies: DCF analysis and a relative P/E framework. Our DCF analysis suggests a warranted stock price of $121. Using our relative P/E framework wherein we apply a 10% premium to the S&P500 multiple, we calculate warranted value of $119 per PPG share. 

    (Please see full report for details)
    Related Searches
    • industrial
    • ppg industries
    • coatings
    • architectural coatings
    Related Knowledge Center
    • Business Operation
    • Market Trends & Forecast
    Suggested For You
    EPS EPS
    PPG Provides Money, Paint for Hungary Primary School Project PPG Provides Money, Paint for Hungary Primary School Project
    PPG Supports Coatings and Polymeric Materials at NDSU With $40G Donation PPG Supports Coatings and Polymeric Materials at NDSU With $40G Donation
    TCI Powder Coatings Hires Achitectural & Building Products Segment Manager TCI Powder Coatings Hires Achitectural & Building Products Segment Manager
    AkzoNobel Publishes Half-Year and Q2 2017 Results AkzoNobel Publishes Half-Year and Q2 2017 Results
    PPG Directors Approve 13-percent Dividend Increase to 45 Cents Per Share PPG Directors Approve 13-percent Dividend Increase to 45 Cents Per Share
    07. Axalta Coating Systems 07. Axalta Coating Systems
    02. AkzoNobel 02. AkzoNobel
    Merck KGaA, Darmstadt, Germany, and Industry Partners Create New Automotive Coating Effects Merck KGaA, Darmstadt, Germany, and Industry Partners Create New Automotive Coating Effects
    Global Coil Coatings Market Set to Ride at a CAGR of 4.6% Over 2027 Global Coil Coatings Market Set to Ride at a CAGR of 4.6% Over 2027
    Global Coil Coatings Market Set to Ride at a CAGR of 4.6% Over 2027 Global Coil Coatings Market Set to Ride at a CAGR of 4.6% Over 2027
    PPG Completes COLORFUL COMMUNITIES Project at Primary School in Deurne, Belgium PPG Completes COLORFUL COMMUNITIES Project at Primary School in Deurne, Belgium
    PPG Issues Statement Regarding Decision by the Dutch Authority for the Financial Markets PPG Issues Statement Regarding Decision by the Dutch Authority for the Financial Markets
    AkzoNobel Opens New Performance Coatings Facility in Chonburi, Thailand AkzoNobel Opens New Performance Coatings Facility in Chonburi, Thailand
    AkzoNobel Confirms Focus on its own Strategy to Accelerate Growth and Value Creation AkzoNobel Confirms Focus on its own Strategy to Accelerate Growth and Value Creation

    Related Content

    • Adhesives and Sealants
      EPS

      EPS

      ...
      Nancy Metzger, Marketing Support 12.06.21

    • Breaking News | Paint & Coatings Manufacturer News
      PPG Provides Money, Paint for Hungary Primary School Project

      PPG Provides Money, Paint for Hungary Primary School Project

      PPG said it expects to complete about 75 more Colorful Community Projects this year.
      08.22.17

    • Breaking News | Paint & Coatings Manufacturer News
      PPG Supports Coatings and Polymeric Materials at NDSU With $40G Donation

      PPG Supports Coatings and Polymeric Materials at NDSU With $40G Donation

      Gifts support the establishment of and scholarships for new professional graduate degree at North Dakota State University.
      08.16.17


    • Breaking News | People in the News
      TCI Powder Coatings Hires Achitectural & Building Products Segment Manager

      TCI Powder Coatings Hires Achitectural & Building Products Segment Manager

      ...
      08.03.17

    • Breaking News | Financial News
      AkzoNobel Publishes Half-Year and Q2 2017 Results

      AkzoNobel Publishes Half-Year and Q2 2017 Results

      ...
      07.25.17

      Trending
      • BEHR Launches COPPER FORCE Interior Paint
      • PPG Sets Goals To Reduce Greenhouse Gas Emissions, Unveils 2021 ESG Report | Coatings World
      • BASF Works with HS Students Aspiring for Careers in STEM
      • PPG Showcases CORACAR SE 4000B Battery Fire Protection Coatings
      • Sika Acquires United Gilsonite Laboratories
      Breaking News
      • What are You Reading this Week?
      • Nippon Paint Automotive Americas Appoints Robert Angart CEO and President
      • Sustainability, Economy are Focus of BCF’s Annual Conference
      • Demand for Rhino Shield Increases
      • ICP Receives ASC Innovation Award for Spray Foam That Meets Changing Environmental Regulations
      View Breaking News >
      CURRENT ISSUE

      May 2022

      • Biocides Market Outlook - 2027
      • Lab & Testing Equipment Directory
      • Aerospace Coatings Market

      Cookies help us to provide you with an excellent service. By using our website, you declare yourself in agreement with our use of cookies.
      You can obtain detailed information about the use of cookies on our website by clicking on "More information”.

      • About Us
      • Privacy Policy
      • Terms And Conditions
      • Contact Us

      follow us

      Subscribe
      Nutraceuticals World

      Latest Breaking News From Nutraceuticals World

      Thorne Relaunches Gut Health Test with Microbiome Wipe
      Alkemist Labs Announces Alkemist Assured Seal and Next Generation Transparency Reports
      GC Rieber Foundations Expand Philanthropic Efforts
      Coatings World

      Latest Breaking News From Coatings World

      What are You Reading this Week?
      Nippon Paint Automotive Americas Appoints Robert Angart CEO and President
      Sustainability, Economy are Focus of BCF’s Annual Conference
      Medical Product Outsourcing

      Latest Breaking News From Medical Product Outsourcing

      MPO's Most-Read Stories This Week—May 28
      New Breast Implant Surgery Guidelines to Enhance Patient Safety
      Rhythm Management Group Debuts RhythmSynergy Tech Platform
      Contract Pharma

      Latest Breaking News From Contract Pharma

      iECURE Enters Agreement with Center for Breakthrough Medicines
      CPDC Enters Clinical Manufacturing Deal with CellBion
      Olon to Build New R&D Center in Italy
      Beauty Packaging

      Latest Breaking News From Beauty Packaging

      K-Beauty Brand Siita Shares Plastic Decomposition Technology with the Beauty Industry
      Shellworks Raises $6.2 Million in Seed Funding
      Ulta Beauty Reports Record First Quarter 2022 Results
      Happi

      Latest Breaking News From Happi

      Global Skincare Treatment Devices Market Expected to Grow at Over 11.5% CAGR Rate Through 2028
      Technology Cuts Plastic Decomposition from 500 Years to Three Months
      Honeywell Addresses Critical Issues Such as Sustainability, Workforce Training and Digitalization
      Ink World

      Latest Breaking News From Ink World

      Weekly Recap: Flint Group, New Inks from Siegwerk and Zeller+Gmelin Lead This Week’s News
      Orion to Finish Gas Black Expansion in Germany by Early 2023
      Richard Childress Racing Shows Off New Wraps for 2022 NASCAR Season
      Label & Narrow Web

      Latest Breaking News From Label & Narrow Web

      UPM Raflatac accelerates label growth with acquisition
      Labelexpo Asia 2022 postponed
      Teklynx software helps Top Clean Injection validate labels
      Nonwovens Industry

      Latest Breaking News From Nonwovens Industry

      Rael Raises $35M in Series B Funding
      Schobertechnologies Offers Rotary Web-fed Converting Solutions
      Thorne Relaunches Gut Health Test with Microbiome Wipe
      Orthopedic Design & Technology

      Latest Breaking News From Orthopedic Design & Technology

      ODT's Most-Read Stories This Week—May 28
      Toetal Solutions Raises $1.02 Million in New Financing
      ManaMed's ManaSport Wearable Ultrasound Earns FDA Nod
      Printed Electronics Now

      Latest Breaking News From Printed Electronics Now

      Weekly Recap: OPV’s Future, Graphene Flagship and Japan Display Top This Week’s Stories
      SEMI Foundation Receives $1.5 Million Grant to Bolster Michigan’s Semiconductor Talent Pipeline
      onsemi Recognized by Fortune 500 for Its Transformation Journey

      Copyright © 2022 Rodman Media. All rights reserved. Use of this constitutes acceptance of our privacy policy The material on this site may not be reproduced, distributed, transmitted, or otherwise used, except with the prior written permission of Rodman Media.

      AD BLOCKER DETECTED

      Our website is made possible by displaying online advertisements to our visitors.
      Please consider supporting us by disabling your ad blocker.


      FREE SUBSCRIPTION Already a subscriber? Login