Stock splits tend to come after a company produces strong returns in terms of share price appreciation, and chemical giant PPG Industries (NYSE: PPG) has an impressive history of splitting its stock on multiple occasions while also producing solid dividend income. Yet even with double-digit percentage returns that go back for decades, PPG investors had to wait a long time before seeing its recent stock split. Shareholders want to know whether another split might be in the works, or if they'll face a similar wait in the future.
Let's take a look at PPG Industries' stock split history to see whether shareholders should anticipate another event in the near future.
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PPG Industries' history of stock splits
The history of PPG Industries' stock splits is a long one, going back half a century:
Data source: PPG Industries investor relations.
As you can see, PPG hasn't hesitated to split its shares when the time has been right. With the exception of its most recent stock split, PPG tended to look at a stock split when its share price started to approach the $75 to $100 range. Like many stocks during the late 20th century, PPG seemed uncomfortable with the idea of having a triple-digit share price. Yet PPG was in some ways even more willing to make split announcements, as unlike many of its peers, PPG didn't necessarily wait until its stock had actually eclipsed the $100 per share mark before pulling the trigger on a stock split.
More recently, though, PPG has adopted a more conservative approach toward stock splits. When the shares reached the $80 mark in 2007, PPG chose not to push for a split, perhaps anticipating the damage the ensuing financial crisis and market meltdown would do. Following the economic recovery, PPG saw its shares soar into the triple digits, yet it once again chose not to take action for several years.
What made PPG split its shares in 2015
Only last year did PPG decide to pull the trigger on a stock split. With its stock climbing well above $200 per share, PPG took action to reduce its share price back toward the low triple digits. In its announcement, the chemical manufacturer said the split "reflects the PPG Board of Directors' continued confidence in the long-term growth and financial performance of the company." It also cited the belief that a split would "make the company's stock easier to trade, more affordable, and potentially more attractive to new investors, and is therefore expected to expand the company's shareholder base."
What's ahead for PPG?
In order to generate another stock split, PPG shares will have to rise in value significantly from current levels. But there are a couple of catalysts that could lead to such a result.
First, PPG's work toward bolstering its overall business has helped it successfully weather tough industry conditions since its last split. The company produces coatings for many different customer industries, including products to fight corrosion in automobiles and marine vessels, food container technology, and protective coverings for eyewear. The construction industry is the most important user of PPG products, and weakness in construction across the globe has slowed PPG's potential growth. Yet the company has worked hard to position itself for an eventual rebound in the global macroeconomic climate, with its late 2014 acquisition of Mexico's Comex being just one way in which PPG is fighting to get a bigger share of the world market.
Also, merger and acquisition activity in the coatings sector could raise interest in PPG. Earlier this year, rivals Sherwin-Williams (NYSE: SHW) and Valspar (NYSE: VAL) announced plans to merge, creating a colossus in the residential paint and coatings market, but also potentially making the post-merger entity more competitive against PPG in its industrial coatings business as well. If Akzo Nobel chooses to look toward PPG as a way to answer back against Sherwin-Williams' buy, then a merger between the two could help lift shares of both companies.
Having just split its shares a year ago, PPG investors can't count on another split anytime soon. However, the prospects for the coatings specialist look strong, and a recovery in the global economy could give the stock the lift it needs to get on track toward another stock split at some point in the future.
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