A Global Player Worth Watching - PPG Industries (PPG)

While there have been some disappointments for second quarter earnings, one firm which has delivered on the sales and earnings front is diversified industrial group PPG Industries (PPG).

 

The company is a leading provider of coatings and specialty products and services to the construction, consumer products, industrial and transportation markets. It reported an 11% increase in sales for the second quarter to $3.5 billion when it released its results on July 15. Second quarter reported net income was $272 million, or $1.63 per share compared to $146 million, or 89 cents per share reported for the same quarter in 2009, representing an 83% jump in earnings per share.

 

The company’s financial performance for the second quarter, despite demand levels that are more than 10 percent below 2008 pre-recession levels, clearly demonstrates the strength of the global portfolio. The company has been restructured to reduce structural (or fixed costs) and has positioned PPG to capitalize on what the company believes will be “a continued, gradual, global economic recovery.”

 

PPG (PPG) also offers a solid dividend. Presently the company trades on an historical dividend yield of around 3.4% and an undemanding forward price to earnings (PE) multiple of around 14 times earnings. Dividends have increased each year for the past five years and the annual payout is now $2.13 per share.

 

The company has a strong history of returning cash to shareholders. This marks the second quarterly dividend rate increase within a year and demonstrates the confidence the company has in the strength and consistent cash generation of its global business portfolio. This marks the company’s 448th consecutive dividend payment and PPG (PPG) has paid uninterrupted annual dividends since 1899 – that’s 111 years!

 

Management at PPG (PPG) has also been active in the market purchasing stock. The company repurchased 1.6 million shares during the second quarter and the company has more than 4.5 million shares remaining under its existing stock repurchase authorizations.

 

If dividends are important to you as a stockholder and you are looking for exposure to a diversified industrial portfolio that will allow you to participate in a rebounding industrial economy, PPG (PPG) could well be a stock to keep in mind.