Summary
PPG pre-released Q3 earnings and highlighted several problems including margin compression and lower international profitability.
Higher input prices are squeezing PPG, a trend that investors should expect to persist in the short-term.
Long-time value investor Nelson Peltz took a position in the stock, however it’s tough to say it trades cheap.
Paint and coatings stocks aren’t something the average investor looks at, but they’re important barometers of both cost inflation and the business cycle. Last week, we watched as PPG Industries (PPG) stole the market's attention, gapping down nearly 10%, citing commodity price increases and FX headwinds as negative impacts on the core business. If these were one-off items, I’d have far less concern, but these are structural trends that will persist at least in the short-term. Value investors are supporting the name on the dip, but I want to exercise caution before investors rush to buy as I don't believe it's cheap enough for the risks at hand.
Source: Owler
