PPG Industries Struggles in Competitive Paint Market
Pennsylvania-based PPG Industries, Inc. (PPG) is a major player in the paint and coatings industry, with a valuation of $28.5 billion. The company operates across more than 70 countries and serves diverse sectors.
PPG Underperforms Relative to Market Growth
Over the past year, shares of PPG have lost 10.2%, significantly trailing the S&P 500 Index ($SPX), which has risen by 31.1%. Year-to-date, PPG has dropped around 18%, contrasting with the S&P 500’s increase of 24.7%.
Further comparison reveals that the Materials Select Sector SPDR Fund (XLB) has also outperformed PPG, gaining 15.9% over the past 52 weeks and 9.4% year-to-date.
Q3 Earnings Show Mixed Results
After releasing its third-quarter earnings on October 16, PPG saw a small increase in share prices, followed by a drop over four consecutive trading days. The adjusted earnings rose by 2.9% year-over-year to $2.13 per share, albeit falling short of the consensus estimate of $2.15. Revenue stood at $4.58 billion, down 1.3% from the previous year, and also missing Wall Street’s target of $4.65 billion. A decline in revenue from the Industrial Coatings segment was a major factor, attributed to falling sales volumes and prices linked to index-based contracts. Investor sentiment may have further soured with the announcement of plans to lay off approximately 1,800 employees on October 17 as part of a cost-cutting initiative.
Future Earnings Projections and Analyst Ratings
Looking ahead to the current fiscal year, which ends in December, analysts project PPG’s earnings per share (EPS) to grow 6.7% year-over-year to $8.18. The company’s earnings history shows some volatility, with three out of the last four quarters either beating or meeting expectations, and one miss.
The average consensus rating among 23 analysts covering the stock is a “Moderate Buy,” with 13 recommending “Strong Buy” and 10 suggesting a “Hold.”
Analyst Outlook and Price Targets
As of November 18, Barclays retained an “Equal-Weight” rating on PPG, lowering its price target to $144, indicating a potential upside of 17.4% from current levels. The consensus mean price target of $149.80 suggests a 22.1% upside, while the highest target at $165 implies an upside potential of 34.5%.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
