PPG Industries (PPG) to Acquire Alpha Coating Technologies

PPG Industries Inc. PPG has inked a deal to acquire Alpha Coating Technologies, LLC (Alpha). The transaction is anticipated to conclude in first-quarter 2020, subject to customary closing conditions. The financial terms of the deal have been kept under wraps.

Alpha focuses on development, manufacture and sale of powder coatings for light industrial applications, heat sensitive substrates; toll manufactures powder coatings and medium density fiberboard. Notably, this West Chicago, IL-based company, founded in 2000, has employee strength of about 35 people.

Per management, Alpha’s best-in-class service, technology and rapid turnaround color matching capabilities is expected to strategically complement PPG Industries.

PPG Industries is taking steps to expand business through strategic acquisitions. Notably, the company completed the buyouts of Whitford Worldwide and Hemmelrath in early 2019. It also completed the purchase of specialty materials maker, Dexmet Corporation, in third-quarter 2019. The company also recently closed the buyout of Italy-based paint and coating manufacture, Industria Chimica Reggiana.

Shares of PPG Industries have rallied 19.1% in the past year against the industry’s decline of 25.3%.

For 2020, PPG Industries expects continued organic growth in the Performance Coatings unit. For the Industrial Coatings unit, it expects a rebound in volume growth in the second half of 2020.

While the company is beginning to witness a modest recovery in industrial demand in China, it expects soft general industrial demand to persist in the United States and Europe.

For 2020, it projects adjusted earnings per share growth between 4% and 9%, which excludes the impact of currency translation. First-quarter 2020 earnings per share from continuing operations are projected between $1.32 and $1.42.

The company expects sales growth of 1-3% (on a constant currency basis) for 2020, including acquisitions.

PPG Industries, Inc. Price and Consensus

 

PPG Industries, Inc. Price and Consensus

PPG Industries, Inc. price-consensus-chart | PPG Industries, Inc. Quote

 

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp. DQ, Royal Gold, Inc. RGLD and Commercial Metals Company CMC.

Daqo New Energy has a projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied 79.4% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Royal Gold has an estimated earnings growth rate of 83.5% for fiscal 2020. It currently flaunts a Zacks Rank #1. The company’s shares have rallied 31.4% in a year.

Commercial Metals has a Zacks Rank #2 (Buy) and a projected earnings growth rate of 20.2% for 2020. The company’s shares have rallied 33.6% in a year.

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