Prices declined for three months starting in July, but a quick reversal happened at the end of September (chart above). Prices have made a higher low in November and recently a higher high. The On-Balance-Volume (OBV) line has turned up modestly and the slope of the 50-day moving average is positive. PPG is poised to test, and hopefully break, above the declining 200-day average. With no bearish divergences between price and momentum, we look for PPG to trade up into overhead resistance in the $110 to $120 area -- $115 is our target.
This longer-term chart, above, of PPG is underwhelming -- the OBV line is pretty flat/boring. The 40-week moving average still has a downward slope, while the Moving Average Convergence Divergence (MACD) oscillator has crossed but from below zero. Traders can stay long PPG looking for further gains, but sell-stops should be raised to just below $100.
TheStreet Ratings team rates PPG INDUSTRIES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate PPG INDUSTRIES INC (PPG) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PPG INDUSTRIES INC has improved earnings per share by 17.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PPG INDUSTRIES INC increased its bottom line by earning $4.05 versus $3.28 in the prior year. This year, the market expects an improvement in earnings ($5.70 versus $4.05).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 16.7% when compared to the same quarter one year prior, going from $371.00 million to $433.00 million.
- 44.47% 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. Along with this, the net profit margin of 11.18% is above that of the industry average.
- Net operating cash flow has increased to $800.00 million or 25.78% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 12.62%.
- The debt-to-equity ratio is somewhat low, currently at 0.89, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: PPG
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.