PPG - Time to Buy This Great Stock on a Dip?
Stock in paint and coatings company PPG (NYSE: PPG) is up nearly 13% in 2021 as I write, but it's weakened lately on the back of a disappointing set of second-quarter earnings. Wall Street analysts have lowered earnings expectations on the back of the report, and many of the issues management identified in the second quarter (supply chain disruptions and raw material price increases) will be ongoing in the third quarter as well. Is now the time to bail out of the stock or think about buying in on a dip?
In a nutshell, PPG got hit by the double whammy of rising raw material prices and supply chain disruptions. Unfortunately, it's going to become a familiar refrain in the current earnings season. It's not that PPG's management, and others, didn't see it coming. Instead, the magnitude of the impacts was much more than had been previously expected.
For example, during the earnings call, CEO Michael McGarry outlined that going into the quarter, he had expected a total impact of $70 million to $90 million from the supply chain disruption and raw material price increases. Instead, it totaled $200 million in the second quarter, and McGarry expects a further $150 million impact in the third quarter.
For further details see:
Time to Buy This Great Stock on a Dip?