Ppg Industries Inc (NYSE: PPG)

Sector: Basic Materials Industry: Specialty Chemicals CIK: 0000079879
Market Cap 31.75 Bn
P/B 6.38
P/E 25.73
P/S 2.06
ROIC (Qtr) 8.57
Div Yield % 1.97
Rev 1y % (Qtr) 1.24
Total Debt (Qtr) 7.91 Bn
Debt/Equity (Qtr) 1.01
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About

PPG Industries, Inc., known as PPG, is a company that has been a significant player in the manufacturing and distribution of paints, coatings, and specialty materials since its incorporation in Pennsylvania in 1883. PPG operates in two main business segments: Performance Coatings and Industrial Coatings. The Performance Coatings segment offers a variety of protective and decorative coatings, adhesives, sealants, and finishes to customers in the aerospace, automotive, and consumer products industries. The Industrial Coatings segment provides coatings...

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Investment thesis

Bull case

  • Operating cash flow of 1.40B provides exceptional 87.50x coverage of minority interest expenses 16M, showing strong core operations.
  • Operating cash flow of 1.40B provides strong 31.11x coverage of stock compensation 45M, indicating sustainable incentive practices.
  • Retained earnings of 22.80B provide full 3.58x coverage of long-term debt 6.36B, indicating strong internal capital position.
  • Robust tangible asset base of 14.04B provides 5.38x coverage of working capital 2.61B, indicating strong operational backing.
  • Tangible assets of 14.04B provide robust 122.13x coverage of other current liabilities 115M, indicating strong asset backing.

Bear case

  • Operating cash flow of 1.40B provides thin coverage of dividend payments of (626M) with a -2.24 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of 201M provide weak support for R&D spending of 412M, which is 0.49x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Retained earnings of 22.80B provide limited buffer against comprehensive income items of (2.26B), which is -10.07x, indicating elevated exposure to market risks.
  • Operating cash flow of 1.40B is outpaced by equity issuance of (928M) (-1.51 ratio), indicating concerning reliance on equity markets for funding operations.
  • Other non-current assets of 1.15B provide minimal coverage for long-term debt of 6.36B, which is 0.18x, indicating potential asset-liability mismatch.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Chemicals
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LIN Linde Plc 259.51 Bn 110.86 9.26 25.93 Bn
2 SHW Sherwin Williams Co 101.80 Bn 102.98 9.01 13.58 Bn
3 ECL Ecolab Inc. 86.78 Bn 76.91 6.25 8.67 Bn
4 APD Air Products & Chemicals, Inc. 58.65 Bn 49.06 6.08 18.14 Bn
5 PPG Ppg Industries Inc 31.75 Bn 25.73 2.06 7.91 Bn
6 DD DuPont de Nemours, Inc. 21.19 Bn -27.20 3.09 3.19 Bn
7 IFF International Flavors & Fragrances Inc 21.16 Bn -8.98 1.87 6.60 Bn
8 ALB Albemarle Corp 19.87 Bn -29.33 3.86 3.19 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.62 1.62
EV to Cash from Ops. EV/CFO 29.76 10.83
EV to Debt EV to Debt 4.52 16.61
EV to EBIT EV/EBIT 19.43 -61.80
EV to EBITDA EV/EBITDA 16.31 -9.02
EV to Free Cash Flow [EV/FCF] EV/FCF 43.45 6.67
EV to Market Cap EV to Market Cap 1.13 5.10
EV to Revenue EV/Rev 2.32 72.68
Price to Book Value [P/B] P/B 6.38 5.37
Price to Earnings [P/E] P/E 25.73 14.34
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.59 -5.46
Dividend Payout Ratio % Div Payout % (Qtr) 62.10 -74.36
Dividend per Basic Share Div per Share (Qtr) 2.75 1.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 85.62 9.98
Interest Coverage Int. cover (Qtr) 6.95 -9.95
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -4.17 -1,110.27
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 46.44 83.68
Dividend Growth (1y) % Div 1y % (Qtr) 4.56 -3.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -30.25 -80.22
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -13.55 48.27
EBIT Growth (1y) % EBIT 1y % (Qtr) -24.48 11.23
EBT Growth (1y) % EBT 1y % (Qtr) -27.43 -62.96
EPS Growth (1y) % EPS 1y % (Qtr) -30.13 -125.48
FCF Growth (1y) % FCF 1y % (Qtr) -45.24 4.34
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -4.13 193.82
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.64 0.70
Cash Payout Ratio Cash Payout (Qtr) 0.30 0.40
Cash Ratio Cash Ratio (Qtr) 0.33 1.24
Current Ratio Curr Ratio (Qtr) 1.47 3.16
Debt to Equity Ratio Debt/Equity (Qtr) 1.01 0.92
Interest Cover Ratio Int Coverage (Qtr) 6.95 -9.95
Times Interest Earned Times Interest Earned (Qtr) 6.95 -9.95
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 15.20 -320.64
EBIT Margin % EBIT Margin % (Qtr) 11.82 -360.99
EBT Margin % EBT Margin % (Qtr) 10.12 -366.51
Gross Margin % Gross Margin % (Qtr) 40.50 29.06
Net Profit Margin % Net Margin % (Qtr) 7.10 -367.54