PPG Q2 Earnings Lag Estimates Despite Strong Sales Growth

PPG’s Segment Review

Performance Coatings’ net sales increased 7% year over year to $1.62 billion. The figure beat our estimate of $1.54 billion. The increase reflected higher selling prices, favorable foreign currency translation and contributions from acquisitions. Organic sales rose 3%, led by aerospace, protective and marine coatings and traffic solutions. These gains were partly offset by lower automotive refinish volumes.

The segment’s EBITDA margin contracted to 22.7% from 25.7% a year earlier. The unfavorable margin movement was primarily caused by lower automotive refinish coatings volumes, reflecting a difficult comparison with prior-year customer ordering patterns and a slower recovery in underlying industry demand.

Global Architectural Coatings’ net sales advanced 8% year over year to $1.1 billion. The figure topped our estimate of $1.06 billion. Foreign currency translation and 2% organic sales growth supported the increase. Higher selling prices more than offset lower volumes, while Latin America and the Asia Pacific generated mid-single-digit organic growth. Mexico benefited from strong retail sales and improving project-related demand.

The segment’s EBITDA margin expanded to 19.4% from 18.4% in the prior-year quarter. The favorable year-over-year movement was driven by higher selling prices and cost-control actions, which more than offset pressure from cost-of-goods-sold inflation.

Industrial Coatings’ net sales rose 7% year over year to $1.78 billion. The figure topped our estimate of $1.67 billion. The improvement was led by higher sales volumes and favorable foreign currency translation. Organic sales increased 5% as all three businesses registered volume growth and benefited from market-share gains. Packaging coatings delivered double-digit organic growth, while automotive OEM coatings outpaced global vehicle production.

The segment’s EBITDA margin declined to 15.9% from 16.6% a year ago. Cost-of-goods-sold inflation weighed on the margin and more than offset the benefit of higher sales volumes. The company expects index-based pricing timing to pressure the segment’s margin during the second half of 2026.

PPG’s Financials

PPG had cash and cash equivalents of $1.52 billion as of June 30, 2026. Long-term debt was $6.2 billion. Cash from operating activities totaled $592 million during the first six months of 2026. Cash generated by continuing operations was $594 million. PPG repurchased $75 million of shares during the second quarter, bringing year-to-date repurchases to $175 million.

PPG’s Q3 & 2026 Outlook

PPG expects third-quarter 2026 organic sales growth to range from a low-single-digit to a mid-single-digit percentage. The company projects adjusted EBITDA margin to range from flat to down 100 basis points year over year. Performance Coatings organic sales are expected to rise by a mid-single-digit to high-single-digit percentage, supported by aerospace demand and an anticipated stabilization in automotive refinish.

For full-year 2026, PPG reaffirmed its adjusted earnings guidance of $7.70-$8.10 per share. The outlook incorporates momentum from market-share gains, pricing and self-help actions, along with management’s updated assumptions for economic activity, foreign exchange and business mix. Aerospace, Latin American architectural coatings and packaging coatings are expected to remain key growth contributors.

PPG’s Price Performance

Shares of PPG have risen 12% over the past year compared with the industry’s 6.5% growth.

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PPG’s Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Carpenter Technology Corporation CRS, Kronos Worldwide, Inc. KRO and Avient Corporation AVNT.

Carpenter Technology is slated to report fourth-quarter fiscal 2026 results on July 30. The Zacks Consensus Estimate for earnings is pegged at $10.58 per share, indicating a 41.44% year-over-year improvement. CRS sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Kronos is scheduled to report second-quarter 2026 results on Aug. 5. The Zacks Consensus Estimate for KRO’s second-quarter loss per share is pegged at 33 cents, indicating a 65.63% year-over-year growth. KRO also flaunts a Zacks Rank #1 at present.

Avient is slated to report second-quarter 2026 results on Aug. 6. The consensus estimate for AVNT’s earnings per share is pegged at $3.08. AVNT presently carries a Zacks Rank #2 (Buy).

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