PPG Industries Inc. PPG is set to release fourth-quarter 2024 results after the closing bell on Jan. 30.

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PPG Industries beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters, missed once while delivering in-line results on the other occasion. It delivered a trailing four-quarter earnings surprise of around 0.5%, on average. The company is expected to have benefited from acquisitions, pricing actions and restructuring cost savings in the fourth quarter. Its performance is likely to have been adversely impacted by weak demand, especially in Europe.

PPG's shares are down 14% in the past year compared with a 16.1% decline of the industry.

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Let’s see how things are shaping up for this announcement.

What Do PPG’s Estimates Say?

The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $4,005.5 million, which suggests a decline of around 7.9% from the year-ago quarter.

Our estimate for PPG’s Industrial Coatings segment’s net sales is pegged at $1,627.4 million, indicating a 6.2% decline on a year-over-year basis.

Also, our estimate for net sales for the Performance Coatings segment stands at $2,637.2 million, suggesting a year-over-year increase of 0.8%.

Factors at Play for PPG 

The company is implementing an aggressive cost-cutting and restructuring strategy to optimize its global cost structure. PPG has implemented considerable actions to address adverse business conditions in specific areas and end-use markets. The cost savings generated by restructuring initiatives are likely to have acted as a tailwind for the company in the December quarter. It expects savings of approximately $35 million for full-year 2024. The company also launched a cost-cutting program, which is estimated to result in annualized pre-tax savings of approximately $175 million (including $60 million in 2025) when completely executed. The approach includes structural cost reductions, primarily in Europe and a few other global businesses. 

PPG Industries effectively addresses raw material cost inflation by implementing effective price increases across its business areas, focusing on margin recovery. The company is expected to have made substantial progress toward increasing consolidated segment margins in the fourth quarter. 

The company is taking steps to build its business inorganically by making value-creating acquisitions. Acquisition contributions are expected to reflect on the company's fourth-quarter performance. Acquisitions such as Tikkurila, Worwag and Cetelon are likely to have supported its top line.

PPG is anticipated to be challenged by weak global industrial production, which is likely to have affected demand in the Industrial Coatings unit. Lower automobile original equipment manufacturer (OEM) build rates, as well as softer industrial production in the United States and Europe, weighed on Industrial Coatings volumes and revenues in the fourth quarter. The protracted crisis between Russia and Ukraine, along with low consumer confidence, are affecting demand in Europe. 

Automotive industry build rates have fallen in Europe and the United States as a result of decreased demand, and they are anticipated to have declined further in the fourth quarter. Lower automotive OEM and industrial production are expected to have weighed on PPG’s fourth-quarter performance. 

What Our Model Unveils for PPG

Our proven model does not conclusively predict an earnings beat for PPG this season. 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 -0.65%. This is because the Most Accurate Estimate stands at $1.64 while the Zacks Consensus Estimate is pegged at $1.65. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PPG currently carries Zacks Rank #4 (Sell).

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 these have the right combination of elements to post an earnings beat this quarter:

ATI Inc. ATI, slated to release its earnings on Feb. 4, has an Earnings ESP of +3.91% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. The consensus estimate for ATI’s fourth-quarter earnings per share is currently pegged at 60 cents.

Avient Corporation AVNT, slated to release earnings on Feb. 13, has an Earnings ESP of +0.11% and carries a Zacks Rank #3 at present. The consensus mark for AVNT’s fourth-quarter earnings is currently pegged at 48 cents.

DuPont de Nemours Inc. DD, slated to release earnings on Feb. 11, has an Earnings ESP of +0.06% and carries a Zacks Rank #3 at present. The consensus mark for DD’s fourth-quarter earnings is currently pegged at 98 cents.

 

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