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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, good cash flow from operations, expanding profit margins, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.2%. 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.
  • Net operating cash flow has increased to $748.00 million or 13.50% when compared to the same quarter last year. In addition, PPG INDUSTRIES INC has also modestly surpassed the industry average cash flow growth rate of 9.59%.
  • 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 51.82% 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 ($7.80 versus $6.06).

PPG Industries, Inc. operates as a coatings and specialty products company. PPG has a market cap of $20.16 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 23.3, above the S&P 500 P/E ratio of 17.7. Shares are up 4.1% year to date as of the close of trading on Tuesday.

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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