Manufacturing is operating on all cylinders. PPG Industries, Inc. (PPG) recently provided first quarter earnings guidance which was much more bullish than the Zacks Consensus Estimate as global industrial activity continued to recover. This Zacks #2 Rank (buy) has a forward P/E of 14.5.
Dividend Superstar
PPG is one of the old mainline manufacturing companies with products in 3 segments: coatings, glass and chemicals.
Founded in 1883 and headquartered in Pittsburgh, the company has been a steady player for decades. It has paid a dividend, uninterrupted by wars, assassinations and the Great Depression, since 1899.
On Mar 11, PPG Industries paid its 450th consecutive dividend. The shares are currently yielding a solid 2.3%.
Strong Q1 Results Anticipated
On Mar 30, the company announced first quarter guidance between $1.30 and $1.35 per share. This was much higher than the Zacks Consensus at the time of $1.12. It also blows by the company’s first quarter 2010 earnings of 69 cents.
PPG has seen further increase in global demand along with higher than anticipated European volumes.
It has also been able to push through higher pricing in some, but not all, of its segments as its commodity chemicals and fiber glass segments are benefiting from higher pricing and stronger end-use market demand.
The trends are expected to continue into the second quarter with the company aggressively trying to push through higher pricing in those segments where it has not yet offset rising costs.
Zacks Consensus Estimates Soar
On the back of a record Q4 and then a very bullish Q1 pre-announcement, it’s not surprising that analysts have been raising estimates sharply.
The 2011 Zacks Consensus jumped to $6.35 from $6.00 per share which would be earnings growth of 22%.
The company will report first quarter results on Apr 21.
Shares at 10-Year Highs
Shares have climbed over the past 6 months to new 10-year highs.
With the rise in its share price, some of its valuations have also jumped a bit in recent months. While it’s P/E still remains in the “value” territory at just under 15, its price-to-book ratio is now a pricier 3.9.
It also has a price-to-sales ratio of 1.1, just out of the range of being undervalued.
But with a 1-year return on equity of 22.4%, PPG still has some solid fundamentals.
This Week’s Value Zacks Rank Buy Stocks
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Manufacturing continues to be the hot spot as the global recovery gains momentum. Worthington Industries Inc. (WOR) recently easily beat the Zacks Consensus Estimate by 32%, sending shares to new 52-week highs. Despite the share surge, the company is still a value. Read the full article.
After a record 2010, Esterline Technologies Corporation (ESL) started off fiscal 2011 on the same strong note, beating the Zacks Consensus Estimate by 47%. This Zacks #1 Rank (strong buy) continues to be a value with a forward P/E of 14.3x estimates. Read the full article.
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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
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