PPG Industries Q3 Earnings: Should you Buy NYSE:PPG Stock Before Call?

in EARNINGS/INVESTING IDEAS by

PPG Industries, Inc. (NYSE:PPG) is scheduled to report Q3 earnings results after markets close for trading on October 19, 2020.

The company is expected to report earnings of $1.92/share on revenue of $3.599 billion. The consensus earnings per share (EPS) of $1.92/share is based on a poll of 13 analysts and represents a growth in eps of 14.8% over the same quarter last year, when the company reported earnings of $1.67/share.

The revenue forecast of $3.599 billion based on a poll of 15 analysts implies a year-over-year (YoY) decline in revenue of −5.9%. Last year the company reported $3.826 billion in revenue for the quarter.

Expected to report EPS growth of 14.8% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $3,598.93 $3,826.00 −5.9%
EPS $1.92 $1.67 14.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from PPG Industries, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.71 $0.99 39.8% Beat
Q1, 2020 $1.16 $1.19 2.2% Beat
Q4, 2019 $1.34 $1.31 −2.2% Missed
Q3, 2019 $1.61 $1.67 3.8% Beat
Q2, 2019 $1.83 $1.85 1.3% Beat
Q1, 2019 $1.21 $1.38 14.1% Beat
Q4, 2018 $1.10 $1.15 4.9% Beat
Q3, 2018 $1.46 $1.45 −0.7% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −3.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 16, 2020 $115.62 $111.88 −3.2% Decline
April 27, 2020 $92.74 $91.49 −1.3% Decline
January 16, 2020 $130.74 $128.49 −1.7% Decline
October 17, 2019 $118.96 $124.23 4.4% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.02, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.02 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

PPG Industries, Inc. is currently trading at $137.74/share, up 0.4% for the day. The company is trading at approximately 99.3% of its 52-week high of $138.39/share. The company’s stock price is up 23.1% since the last earnings report and up 1.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 68.57 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:PPG Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 32.18 and a forward P/E multiple of 24.48.

PPG Industries, Inc.’s current share price also implies a price-to-book (P/B) multiple of 6.68. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $137.74
P/E Ratio 32.2x
P/E Ratio (Fwd) 24.5x
PEG Ratio −1.9
Total Debt / Total Capital 18.1%
Levered Free Cash Flow $1.548 billion
EV / EBITDA 18.1x

Finbox

PPG Industries, Inc. is a large-cap stock with a market capitalization of $32.367 billion and a total enterprise value of $37.229 billion. The company operates in the Materials sector and the Chemicals industry.

PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials worldwide. The company’s Performance Coatings segment offers coatings, solvents, adhesives, sundries, and software for automotive and commercial transport/fleet repair and refurbishing, light industrial coatings, and specialty coatings for signs; and coatings, sealants, transparencies, transparent armor, adhesives, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft. It also provides coatings and finishes for the protection of metals and structures, such as metal fabricators, heavy duty maintenance contractors, and manufacturers of ships, bridges, and rail cars; and paints, wood stains, and purchased sundries for painting and maintenance contractors, and consumers for decoration and maintenance of residential and commercial building structures. The company’s Industrial Coatings segment provides coatings, adhesives and sealants, and metal pretreatments, as well as services and coatings applications for automotive original equipment manufacturers; appliances, agricultural and construction equipment, consumer electronics, automotive parts and accessories, building products, transportation vehicles and other finished products; and on-site coatings services. It also provides coatings for the protection, performance, and decoration of metal cans, closures, plastic tubes, industrial packaging, and promotional and specialty packaging. In addition, this segment offers amorphous precipitated silica for tire, battery separator, and other end-uses; TESLIN substrates for labels, e-passports, drivers’ licenses, breathable membranes, and other loyalty and identification cards; and organic light emitting diode materials, displays and lighting lens materials, and optical lenses and color-change products, as well as photochromic dyes. The company was founded in 1883 and is headquartered in Pittsburgh, Pennsylvania.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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