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PPG Industries Inc. Stock Buy Recommendation Reiterated (PPG)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- PPG Industries (NYSE: PPG) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, solid stock price performance, growth in earnings per share and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:

  • PPG's revenue growth has slightly outpaced the industry average of 2.3%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 39.70% is the gross profit margin for PPG INDUSTRIES INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.22% trails the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 53.55% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • PPG INDUSTRIES INC has improved earnings per share by 5.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PPG INDUSTRIES INC reported lower earnings of $6.06 versus $6.87 in the prior year. This year, the market expects an improvement in earnings ($7.82 versus $6.06).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Chemicals industry average. The net income increased by 5.1% when compared to the same quarter one year prior, going from $216.00 million to $227.00 million.

PPG Industries, Inc. manufactures and supplies protective and decorative coatings. PPG has a market cap of $18.91 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 21.9, above the S&P 500 P/E ratio of 17.7. Shares are down 0.5% year to date as of the close of trading on Wednesday.

You can view the full PPG Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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