PPG Industries (PPG) Shares Rise 16% In 6 Months: Here's Why

PPG Industries Inc.’s (NYSE:PPG) shares are up 15.9% over the past six months. The company has also topped its industry’s rise of 0.8% over the same time frame.

The paint giant has a market cap of roughly $31.3 billion and average volume of shares traded in the last three months is around 1,225.7K. The company has an expected long-term earnings per share growth of 9.3%.

Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.

What’s Aiding the Stock?

Better-than-expected earnings performance in the third quarter and healthy growth prospects has contributed to the gain in PPG Industries’ shares. The company’s adjusted earnings per share of $1.67 for the third quarter outpaced the Zacks Consensus Estimate of $1.61.

The company, in its third-quarter call, said that it expects adjusted earnings in the range of $6.17-$6.27 for 2019. The projection includes fourth quarter year-over-year growth in constant currencies of around 15% at the mid-point. Moreover, the guidance represents adjusted earnings per share growth at the low-to-mid end of earlier announced 7-10% range, barring currency translation impacts.

The Zacks Consensus Estimate for earnings for 2019 of $6.25 reflects an expected year-over-year growth of 5.6%. Moreover, earnings are expected to register a 17.4% growth in the fourth quarter.

PPG Industries is benefiting from its cost management initiatives, pricing actions and strategic acquisitions amid a weak industrial demand environment. It remains focused on improving its cost structure and recovering margins through price increases. The company’s cost savings programs delivered around $20 million in savings in the third quarter. It also expects to achieve another $20 million in cost savings in the fourth quarter.

The company is also taking steps to grow business through acquisitions. It, earlier this year, completed the acquisitions of Whitford Worldwide and Hemmelrath. The company expects these two along with the SEM Products acquisition to add around $400 million in annualized revenues.

PPG Industries also completed the purchase of specialty materials maker, Dexmet Corporation, in the third quarter. The acquisition enables the company to add value to customers by enhancing product offerings as well as expanding R&D capabilities. It will also increase its market reach across the automotive, aerospace and industrial coatings businesses.

PPG Industries is also committed to boost shareholders' returns with cash deployment. The company, in July 2019, raised its quarterly dividend by 6% to 51 cents per share.

Stocks to Consider

Some better-ranked stocks in the basic materials space include Kirkland Lake Gold Ltd. (TSX:KL) , Agnico Eagle Mines Limited (NYSE:AEM) and Franco-Nevada Corporation (TSX:FNV) .

Kirkland Lake Gold has projected earnings growth rate of 97.1% for the current year and sports a Zacks Rank #1 (Strong Buy). The company’s shares have surged around 70% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has a projected earnings growth rate of 167.9% for the current year and carries a Zacks Rank #2 (Buy). The company’s shares have rallied roughly 54% in a year’s time.

Franco-Nevada has estimated earnings growth rate of 45.3% for the current year and carries a Zacks Rank #2. The company’s shares have shot up roughly 36% in a year’s time.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>