PPG Posts Record Q4 Sales; Shares Sink 3% After-Market

Shares of specialty materials supplier PPG Industries, Inc. (NYSE: PPG) fell nearly 3% in the extended trading session on Thursday, even after the company reported higher-than-expected financial results for the fourth quarter of 2021.

Pennsylvania-based PPG supplies paints, coatings, and specialty materials to customers in 70 countries across the world.

Adjusted earnings declined 25% year-over-year to $1.26 per share but came in above analysts’ expectations of $1.18 per share.

Net sales grew around 12% year-over-year to a record $4.2 billion, beating the Street’s estimate of $4.04 billion.

Net sales of the Performance Coatings segment increased 16% year-over-year to $2.5 billion, and the Industrial Coatings segment’s net sales jumped 6% year-over-year to $1.7 billion.

The Chairman and CEO of PPG, Michael H. McGarry, said, “Our quarterly sales, which were a record for any fourth quarter, were aided by acquisition-related sales and above-market sales volume performance in several of our end-use markets, including automotive refinish, marine, and PPG-Comex architectural coatings.”

“Looking ahead, while demand for PPG products remains strong, the heightened supply and COVID-related disruptions experienced in the fourth quarter are expected to continue in the first quarter of the year impacting our ability to manufacture and deliver products,” McGarry added.

Outlook

Along with the fourth-quarter results, the company has also provided guidance for the first quarter of 2022. It expects aggregate net sales volume to witness a year-over-year decline in the mid-single-digit percentage range.

Additionally, PPG expects adjusted EPS to range from $1.02 to $1.20, compared to the consensus estimate of $1.59.

Wall Street’s Take

Following the announcement, BMO Capital analyst John McNulty maintained a Buy rating on the stock with a $199 price target (24.6% upside potential).

Overall, the stock has a Moderate Buy consensus rating based on 9 Buys and 5 Holds. The average PPG stock forecast of $184.85 implies 15.8% upside potential. Shares have gained 17.5% over the past year.

Smart Score

PPG scores a “Perfect 10” on TipRanks’ Smart Score rating system. This implies that the stock has strong potential to outperform market expectations, making it one of the best growth stocks for 2022.

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