Why PPG Industries (PPG) Stock Is Gaining In Pre-Market Trading Today

NEW YORK (TheStreet) -- PPG Industries (PPG) was gaining 4.6% to $213.51 in pre-market trading Monday after agreeing to acquire Mexico's Consorcio Comex.

PPG will acquire the architectural and industrial coatings company for $2.3 billion. Comex reported sales of about $1 billion in 2013 through about 36,000 stores in Mexico and Central America. PPG said the dell will be immediately accretive to earnings.

"The acquisition is very complementary to PPG as it adds a leading architectural coatings business in Mexico and Central America, a region where we have negligible architectural coatings presence," PPG CEO Charles E. Bunch said in a press release. "We are excited to participate in the growing Mexican economy and look forward to working with the Comex team as we integrate the business into PPG."

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TheStreet Ratings team rates PPG INDUSTRIES INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate PPG INDUSTRIES INC (PPG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PPG's revenue growth has slightly outpaced the industry average of 7.1%. Since the same quarter one year prior, revenues rose by 17.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
  • PPG INDUSTRIES INC reported significant earnings per share improvement 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 $6.94 versus $4.69 in the prior year. This year, the market expects an improvement in earnings ($9.44 versus $6.94).
  • 42.49% 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 34.70% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 283.14% to $163.00 million when compared to the same quarter last year. In addition, PPG INDUSTRIES INC has also vastly surpassed the industry average cash flow growth rate of -1.65%.
  • You can view the full analysis from the report here: PPG Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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