PPG Industries (PPG) Up 15% in 3 Months: What’s Driving It?

PPG Industries Inc

’s

PPG

shares have gained 14.5% in the past three months. The company has also outperformed the

industry

’s rise of 13.5 % over the same time frame.

PPG Industries, a Zacks Rank #2 (Buy) stock, has a market cap of roughly $34.1 billion and average volume of shares traded in the last three months is around 1,210.9K. The company has expected long-term earnings per share growth rate of 6.8%.

Let’s take a look into the factors behind the stock’s price appreciation.

What’s Aiding PPG?

PPG Industries is benefiting from its restructuring initiatives, cost-management actions and efforts to grow its business inorganically. These measures have helped the company to deliver forecast-topping results in the third quarter.

The company is actively managing costs amid a challenging environment due to the coronavirus pandemic. In the third quarter, it delivered more than $35 million of incremental structural savings from business restructuring programs and around $90 million of cost savings from various interim initiatives. PPG Industries expects to achieve restructuring savings of $30-$35 million in the fourth quarter.

Moreover, PPG Industries is undertaking steps to grow business through strategic acquisitions. The acquisition of specialty materials maker, Dexmet Corporation, has enabled the company to add value to its customers by enhancing product offerings as well as expanding R&D capabilities. The purchase of Industria Chimica Reggiana also complements the company’s current product offerings for the automotive refinish and light industrial coatings industries. Earlier this year, the company also closed the acquisition of Alpha Coating Technologies.

The company also recently acquired Ennis-Flint, a global manufacturer of coatings. This acquisition helps PPG Industries expand its product portfolio and broaden opportunities in rapidly developing and high-growth mobility technology solutions.

The company is also committed toward boosting returns to shareholders leveraging strong cash flows. In July 2020, it raised its quarterly dividend by 6% to 54 cents per share. Notably, PPG Industries raised its annual dividend payout for 49th straight year. It also generated more than $800 million of cash from operations during the third quarter.

Earnings estimates for PPG Industries have also gone up in the past three months. The consensus estimate for 2021 has been revised 13.6% upward over the same time frame. The favorable estimate revisions instill investors’ confidence in the stock.

Other Stocks to Consider

Some other top-ranked stocks in the basic materials space include

Fortescue Metals Group Limited


FSUGY

,

BHP Group


BHP

and

Impala Platinum Holdings Limited


IMPUY

.

Fortescue has a projected earnings growth rate of 53.6% for the current fiscal. The company’s shares have surged 140.8% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see


the complete list of today’s Zacks #1 Rank stocks here


.

BHP has an expected earnings growth rate of 43.3% for the current fiscal. The company’s shares have gained around 20% in the past year. It currently flaunts a Zacks Rank #1.

Impala has an expected earnings growth rate of 131.7% for the current fiscal. The company’s shares have surged around 36% in the past year. It currently sports a Zacks Rank #1.

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