We've been asking ourselves recently if the market has placed a fair valuation on PPG Industries. Let's dive into some of the fundamental values of this Large-Cap Consumer Discretionary company to determine if there might be an opportunity here for value-minded investors.
an Increase in Expected Earnings Improves Its Value Outlook but Trades Above Its Graham Number:
PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials in the United States, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 20.93 and an average price to book (P/B) ratio of 2.93. In contrast, PPG Industries has a trailing 12 month P/E ratio of 18.4 and a P/B ratio of 3.03.
PPG Industries has moved -21.2% over the last year compared to 13.8% for the S&P 500 — a difference of -35.0%. PPG Industries has a 52 week high of $131.24 and a 52 week low of $90.24.
Positive Cash Flows:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $15,146 | $13,834 | $16,802 | $15,614 | $16,242 | $15,845 |
| Operating Margins | 11% | 10% | 11% | 9% | 10% | 12% |
| Net Margins | 8% | 8% | 9% | 7% | 8% | 7% |
| Net Income (M) | $1,243 | $1,059 | $1,439 | $1,026 | $1,270 | $1,116 |
| Net Interest Expense (M) | $132 | $138 | $121 | $167 | $247 | $247 |
| Depreciation & Amort. (M) | $375 | $371 | $389 | $357 | $360 | $360 |
| Diluted Shares (M) | 238 | 238 | 239 | 237 | 237 | 235 |
| Earnings Per Share | $5.22 | $4.45 | $6.01 | $4.32 | $5.35 | $4.75 |
| EPS Growth | n/a | -14.75% | 35.06% | -28.12% | 23.84% | -11.21% |
| Avg. Price | $108.19 | $110.3 | $153.67 | $131.34 | $149.55 | $101.01 |
| P/E Ratio | 20.53 | 24.57 | 25.27 | 30.19 | 27.69 | 21.31 |
| Free Cash Flow (M) | $1,667 | $1,826 | $1,191 | $477 | $1,895 | $699 |
| CAPEX (M) | $413 | $304 | $371 | $486 | $516 | $721 |
| EV / EBITDA | 14.66 | 17.36 | 19.04 | 21.62 | 19.52 | 13.22 |
| Total Debt (M) | $5,544 | $5,912 | $6,574 | $7,109 | $6,348 | $6,740 |
| Net Debt / EBITDA | 2.13 | 2.36 | 2.53 | 3.51 | 2.37 | 2.47 |
| Current Ratio | 1.41 | 1.41 | 1.42 | 1.52 | 1.47 | 1.31 |
PPG Industries has slight revenue growth and increasing reinvestment in the business, decent operating margins with a stable trend, and healthy leverage levels. However, the firm has positive cash flows. Finally, we note that PPG Industries has flat EPS growth and just enough current assets to cover current liabilities, as shown by its current ratio of 1.31.
