I am a cynic by nature, but the quarterly results that PPG Industries (NYSE: PPG) just reported have made me a believer. Sales increased 15% year over year. Adjusted earnings per share from continuing operations were up 28%. The volume of product sold increased by just under 5% relative to the year-ago quarter.
While the headline numbers are nice, the segment operating results are even better. Each one of PPG's operating segments reported sales increases of 10% or more. PPG's results seem even more impressive in light of the slowing U.S. economy. Judging from today's 4%-plus gain in PPG's stock price, investors apparently expected weaker results. While a large portion of its products are used in the manufacture of new items -- whether for industrial users or consumers -- PPG's diversification should keep it fairly safe from a slowing economy.
The U.S. economy will matter less to PPG in the future than it has in the past. PPG's recently closed acquisition of Netherlands-based SigmaKalon will push PPG's U.S.-based revenues down substantially going forward, to around 50%.
While things are going well for PPG, its good fortunes have not been shared equally throughout the paint and coatings industry. Peer Sherwin-Williams' (NYSE: SHW) shares, for example, are off around 10% over the past week. Investors interested in PPG should keep an eye on Sherwin-Williams' results in two weeks, as they'll give a better read on how badly the economy is hurting the industry and just how well PPG is navigating the muddle.
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