PPG Industries Boosts Shareholders' Return - Analyst Blog

Coatings giant PPG Industries Inc. PPG has increased its quarterly dividend by 10% to 67 cents per share from the prior payout of 61 cents a share. The raised dividend will be paid on Jun 12, 2014, to stockholders of record as of May 12, 2014.

The dividend increase is a testimony of the company's continuing strong growth and cash-generation prospects. This action also plays an important part in maintaining the company's balanced cash-deployment strategy.

Separately, the Board of PPG Industries has authorized the repurchase of shares worth $2 billion. The authorization is effective immediately and does not expire, which gives management the choice to determine the conditions under which shares may be bought back. Share repurchases will be made per the applicable securities laws in the open market or in privately negotiated transactions.

The conditions applied on share repurchases are that they may commence or cease without prior notice depending on economic and equity market conditions, magnitude of other cash uses, including pace and timing of acquisitions, and other factors.

Prior to this, in Oct 2011, PPG Industries' Board authorized the repurchase of 10 million shares of outstanding common stock. The company repurchased 1.1 million shares (or $200 million) during the first quarter of 2014 to complete the program.

These moves adopted by PPG Industries testify its commitment to boost shareholders' value while retaining adequate funds for its future growth.

Shares of PPG Industries gained as much as 4.4% in the trading session following these news coupled with the announcement of its first-quarter 2014 results.

PPG Industries recorded adjusted earnings from continuing operations (excluding acquisition-related expenses of $2 million or a penny per share) of $1.98 a share for first-quarter 2014, up 42% from $1.39 per share reported in the year-ago quarter.

The company has delivered record first-quarter adjusted earnings on the back of a strong coatings portfolio, broad global footprint, aggressive cost discipline, prudent cash deployment and targeted cost synergies received from acquisitions.

Revenues rose 17% year over year to $3,636 million in the reported quarter from $3,108 million in the year-ago quarter. The year-over-year rise is attributable to higher industry demand in aerospace and automotive original equipment manufacturers (OEM) coatings. Results were also aided by accelerated global volume growth across all regions including Europe, where volumes grew due to economic recovery.

PPG Industries carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the chemical industry include Cabot Corporation CBT, Methanex Corp. MEOH and Huntsman Corporation HUN. While Cabot carries a Zacks Rank #1 (Strong Buy), Methanex and Huntsman retain a Zacks Rank #2 (Buy).