For the last reported quarter, consolidated net sales increased by 5.5% to $2.7 billion. On the earnings front, it earned $2.56 per share, which missed consensus estimates of $2.58, but it was more than year-ago quarterly earnings of $2.17 per share. On applying corrections for a settlement related to an import-duty assessment in Brazilian operations and $0.02 per-share adjustments for unfavorable currency movements, the earnings worked out to $2.46 per share.
Sherwin-Williams Company (NYSE:SHW) lacks diversification and is a coatings-only company, unlike PPG. Sherwin-Williams Company (NYSE:SHW) is witnessing a cut in earnings estimates, and none of the analysts have revised their outlook upward for the coming quarters or for fiscal 2014. Also, all estimates have declined in the past 30 days for 2013 and 2014. So the company might perform well in the current conditions of a strong auto market, but the long-term investors should choose a more diversified company and look at others in the space.
The Valspar Corporation (NYSE:VAL) relies on Lowe’s and other third-party retailers for selling its products. Since Valspar maintains no pricing power and switching costs are low, it has no competitive advantages. However, Valspar has a strong pipeline of new products and significant possibilities for market share gains in both its paints and coatings segments.
The Valspar Corporation (NYSE:VAL) just recently concluded its acquisition of Italian industrial coatings manufacturer Inver Holding S.r.l. This acquisition will enable Valspar to use Inver’s strong product portfolio, leading technology, and distribution network in order to win more customers, and hence add to its top-line and earnings in the future.
The company remains committed to making meaningful investments in the world’s largest industrial markets, such as China, Europe and Latin America, to propel growth. The Valspar Corporation (NYSE:VAL) expects to gain from new customers in consumer paints, packaging, coil and wood coatings in the second half of fiscal 2013.
Not all companies are created equal and not all perform same way. One of the indicators of how these three companies are performing is ROIC, and here’s the five-year chart to show you how they’ve been doing:
PPG Return on Invested Capital data by YCharts
Conclusion
PPG Industries, Inc. (NYSE:PPG) has the highest return on invested capital among its peers. The company might have missed estimates in the recent quarter, but it displayed good growth. The auto market has been performing well and PPG is seeing good strength in its end markets, so the company should do well in the future.
The article This Company Is Making the Right Moves to Grow Its Business originally appeared on Fool.com and is written by ANUP SINGH.
ANUP SINGH has no position in any stocks mentioned. The Motley Fool recommends Sherwin-Williams. ANUP is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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