PPG PPG Industries
Coatings cash cow with better margins; at 106 the price roughly matches value, so no bargain.
The story
PPG is a mature, globally diversified coatings franchise (aerospace, auto refinish, industrial, architectural) with brand, specification and distribution moats that support pricing power but offer little volume growth. After divesting lower-margin segments it has lifted operating margins from about 10% to about 14%. It is a late-stage cash cow whose value depends on holding those margins while returning cash, not on growth.
Nothing material changed, so the drivers carry over from the prior take. Y1 growth is trimmed slightly to 3.5% because TTM revenue of 16.42B shows only modest volume and price gains against a 5-year CAGR of 0.6%. The 15.5% target margin is only a modest step above TTM 13.9% and FY 14.4%, which fits the mix shift and cost programs. Sales-to-capital of 1.1 matches the observed 1.08.
Value drivers
| Revenue growth (Y1) | 3.5% |
| Terminal growth | 2.5% |
| Forecast horizon | 6y |
| Target operating margin | 15.5% |
| Years to target margin | 4 |
| Sales-to-capital | 1.10 |
| Beta | 1.05 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 8.8% |
| Terminal WACC | 8.6% |
Valuation bridge
| PV of explicit FCFF | 7.41B |
| PV of terminal value | 18.63B |
| Equity value | 20.32B |
| ÷ shares → per share | $91.42 |
News
neutral +0.10 · 8 articles
- Is PPG Industries (PPG) Undervalued Following Its Coatings Push And Leadership Changes?
- QXO (QXO) Bets Its Building Products Roll-Up On A Proven Operator
- Why PPG Industries (PPG) is a Great Dividend Stock Right Now
- Is PPG Industries Stock Underperforming the Dow?
- 3 of the Most Resilient High-Yield Dividend Stocks in the Chemical Sector: A Safety Deep Dive
- PPG Industries' ONE RANGE Portfolio Simplifies Marine Maintenance
- PPG Industries (PPG) Could Be a Great Choice
- Here's Why You Should Hold PPG Industries Stock for Now
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 17.00B | 3.5% | 14.3% | 1.89B | 522.49M | 1.37B | 1.26B |
| 2 | 17.56B | 3.3% | 14.7% | 2.00B | 509.87M | 1.49B | 1.26B |
| 3 | 18.10B | 3.1% | 15.1% | 2.12B | 494.78M | 1.63B | 1.26B |
| 4 | 18.63B | 2.9% | 15.5% | 2.24B | 477.20M | 1.76B | 1.26B |
| 5 | 19.13B | 2.7% | 15.5% | 2.30B | 457.18M | 1.84B | 1.21B |
| 6 | 19.61B | 2.5% | 15.5% | 2.36B | 434.74M | 1.92B | 1.16B |
Key risks
- Industrial and auto volume weakness in a cyclical downturn erodes operating leverage
- Raw material (resin, TiO2, solvent) inflation compresses margins before price catches up
- Leadership transition and portfolio moves distract execution; 5.1B net debt limits flexibility
Catalysts
- Aerospace coatings growth and refinish pricing sustaining margin expansion toward 15%+
- Buybacks and dividend growth funded by roughly 1.5B of steady free cash flow