PPG Industries Inc. PPG announced that total net sales for July surpassed its original estimates, reflecting a continuation of the strong demand recovery experienced in June.
Factoring in the stronger sales performance in July, the company now projects sales volumes for third-quarter 2020 to be down 6-11% year over year, excluding foreign currency translation, It earlier expected a year-over-year decline of 8-15%.
Additionally, the company now expects third-quarter operating margin decrements to be between 10% and 15%, which is better than roughly 25% experienced in the second quarter of 2020. The better margin decrements are on account of healthy operating margin leverage from higher-than-expected sales volumes coupled with sustained strong cost management.
Per PPG management, the company’s sales for July increased sequentially on account of improving demand trends in China and Europe businesses throughout a range of coating end-use markets and in global industrial production. However, sales were down 7% year over year.
Shares of the company have gained 6.9% in the past year compared with 2.2% growth of the industry.
On its second-quarter earnings call, it expected to achieve restructuring savings of $60-$70 million in the second half of 2020.
Moreover, it anticipates corporate expenses of $50-$55 million and net interest expenses of $32-$36 million for the third quarter.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Equinox Gold Corp. EQX, Eldorado Gold Corporation EGO andRoyal Gold, Inc. RGLD.
Equinox Gold has a projected earnings growth rate of 255.2% for the current year. The stock has rallied around 111% in a year. It currently has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Eldorado Gold has a projected earnings growth rate of 2225% for the current year. The company’s shares have gained around 44% in a year. It currently has a Zacks Rank #2.
Royal Gold has an expected earnings growth rate of 62.1% for 2020. The company’s shares have gained 7.4% in the past year.It is presently a Zacks #2 Ranked player.
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