PPG Industries to Report Q2 Earnings: What's in the Cards?
PPG Industries beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters, and missed it twice. It delivered a trailing four-quarter earnings surprise of around 0.9%, on average. While the company is expected to have benefited from acquisitions and restructuring cost savings in the second quarter, its performance is likely to have been adversely impacted by weak demand.
PPG's shares are down 9.2% in the past year compared with the industry's 2.1% decline.
Let's see how things are shaping up for this announcement.
What Do PPG's Revenue Estimates Say?
The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $4,130 million, which suggests a decline of around 13.8% from the year-ago quarter.
Our estimate for PPG's Industrial Coatings segment's net sales is pegged at $1,632.2 million, indicating a 6.6% decline on a year-over-year basis.
Also, our estimate for net sales for the Performance Coatings segment is $1,439.3 million, suggesting a year-over-year increase of 1.5%. The same for the Global Architectural Coatings segment is pinned at $1,002.6 million, suggesting a 6.3% year-over-year decline.
Factors at Play for PPG
PPG Industries is executing a cost-reduction and restructuring strategy while optimizing its working capital needs. The savings from these restructuring efforts are expected to have provided a boost to the company's performance. These initiatives are largely concentrated on regions and end markets facing challenging business conditions, aiming to lower the company's overall cost structure.
PPG has introduced a broad cost reduction initiative aimed at achieving approximately $175 million in annualized pre-tax savings once fully implemented. The program focuses on lowering structural costs, particularly in Europe and select global operations. These actions highlight PPG Industries' dedication to improving operational efficiency and maintaining long-term financial stability. Additionally, the company is increasing selling prices across its various business segments to counteract cost inflation and support profitability. The benefits of cost and pricing actions are expected to be reflected in its second-quarter margins.
PPG is facing headwinds from sluggish global industrial production, which is likely to have dampened demand in its Industrial Coatings segment. Declining automotive OEM build rates, along with weaker industrial activity in both the United States and Europe, are expected to have negatively impacted volumes and sales. In addition, low consumer confidence in Europe continues to weigh on demand.
Automotive production rates declined in both Europe and the United States in the first quarter due to reduced demand and are expected to have decreased further in the second quarter. In the second quarter, organic growth is likely to have been constrained by softer automotive OEM activity and industrial output. Demand for industrial coatings is expected to have remained subdued during the quarter.
What Our Model Unveils for PPG
Our proven model does not conclusively predict an earnings beat for PPG this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that's not the case here.
Earnings ESP: Earnings ESP for PPG is -0.68%. The Zacks Consensus Estimate for the second quarter is currently pegged at $2.22. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks Rank: PPG currently carries a Zacks Rank #3.
Basic Materials Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Royal Gold, Inc. RGLD is slated to report second-quarter results on Aug 6. It has an Earnings ESP of +6.85%. The Zacks Consensus Estimate for earnings is pegged at $1.70. RGLD beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 9%. RGLD carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Kinross Gold Corporation KGC, scheduled to report second-quarter results on July 30, has an Earnings ESP of +0.93%. The Zacks Consensus Estimate for KGC's second-quarter earnings is pegged at 27 cents. KGC beat the Zacks Consensus Estimate in three of the last four quarters, with the average earnings surprise being 16.1%. KGC currently carries a Zacks Rank #1.
Agnico Eagle Mines Limited AEM is slated to report second-quarter results on July 30. It has an Earnings ESP of +7.97%. The consensus estimate for AEM's earnings is pegged at $1.66. AEM, carrying a Zacks Rank #1, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 12.3%.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They include
Stock #1: A Disruptive Force with Notable Growth and Resilience
Stock #2: Bullish Signs Signaling to Buy the Dip
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Stock #4: Leader In a Red-Hot Industry Poised for Growth
Stock #5: Modern Omni-Channel Platform Coiled to Spring
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.
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PPG Industries, Inc. (PPG): Free Stock Analysis Report
Kinross Gold Corporation (KGC): Free Stock Analysis Report
Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report
Royal Gold, Inc. (RGLD): Free Stock Analysis Report
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Kinross continues to demonstrate strong financial performance and remains committed to driving shareholder returns. KGC has a strong liquidity position and generates substantial cash flows, which allows it to finance its development projects, pay down debt and drive shareholder value. Higher gold prices should boost KGC's profitability and drive cash flow generation. Final Thoughts: Buy KGC Shares With a strong pipeline of development projects, solid financial health, rising earnings estimates and a healthy growth trajectory, KGC stock presents an attractive investment case ahead of its earnings announcement. With compelling fundamentals, and gold price tailwinds firmly remaining in place, KGC looks poised to deliver attractive returns to investors, making it a prudent choice for those looking to capitalize on the favorable market conditions. Higher. Faster. Sooner. 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