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PPG’s Q2 Earnings Miss Estimates; Shares Slip 5.7%
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PPG’s Q2 Earnings Miss Estimates; Shares Slip 5.7%

Shares of PPG Industries (PPG) lost 5.7% in extended market hours on Monday after the company reported lower-than-expected earnings for the second quarter. The Pennsylvania-based company supplies specialty materials, coatings and paints worldwide.

The company reported adjusted earnings per share (EPS) of $1.94, up from $1.09 in the second quarter last year. However, it missed the Street’s estimates of $2.20.

Quarterly net sales increased 45% year-over-year to $4.4 billion, marginally beating analysts’ expectations of $4.33 billion. Performance Coatings segment’s net sales rose 33% to $2.8 billion, and net sales of Industrial Coatings segment climbed 70% to $1.6 billion.

For the third quarter, the company expects net sales to rise by 21% to 23% year-over-year. It expects to report adjusted EPS between $7.40 and $7.60. (See PPG stock chart on TipRanks)

The Chairman and CEO of PPG, Michael H. McGarry, said, “Overall economic demand growth remains very broad and robust and, as supply conditions normalize, we expect strong sales growth later this year and into next year aided by our technology advantaged products, our diverse geographic and end-use market participation, and continuing recovery from our aerospace business.”

On July 1, Societe Generale analyst Peter Clark maintained a Buy rating on the stock and raised the price target from $168 to $192 (15.8% upside potential). In a research note to investors, the analyst said, “Despite rising input costs, cost discipline and pricing power should ensure operating leverage and continue to drive margins.”

Overall, the stock has a Strong Buy consensus based on 5 Buys and 1 Hold. The average PPG Industries price target of $191.83 implies 15.7% upside potential. The company’s shares have gained 51.5% over the past year.

According to TipRanks’ Smart Score rating system, PPG scores an 8 out of 10, suggesting that the stock is likely to outperform market averages.

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