NYSE:PPG

Stock Analysis Report

Executive Summary

PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials worldwide.

Rewards

Trading at 11.4% below its fair value

Earnings are forecast to grow 16.1% per year

Pays a high and reliable dividend of 1.57%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Established dividend payer with mediocre balance sheet.


Similar Companies

Share Price & News

How has PPG Industries's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PPG has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-3.5%

PPG

-1.2%

US Chemicals

0.6%

US Market


1 Year Return

23.6%

PPG

0.4%

US Chemicals

24.6%

US Market

Return vs Industry: PPG exceeded the US Chemicals industry which returned 1.6% over the past year.

Return vs Market: PPG underperformed the US Market which returned 25.1% over the past year.


Shareholder returns

PPGIndustryMarket
7 Day-3.5%-1.2%0.6%
30 Day-5.1%-1.9%3.0%
90 Day2.1%3.4%10.6%
1 Year25.7%23.6%16.1%0.4%27.3%24.6%
3 Year31.2%24.8%29.8%5.0%50.5%40.8%
5 Year23.0%13.8%50.4%17.9%78.9%59.1%

Price Volatility Vs. Market

How volatile is PPG Industries's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is PPG Industries undervalued compared to its fair value and its price relative to the market?

14.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PPG ($128.49) is trading below our estimate of fair value ($144.99)

Significantly Below Fair Value: PPG is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: PPG is poor value based on its PE Ratio (25.6x) compared to the Chemicals industry average (20.8x).

PE vs Market: PPG is poor value based on its PE Ratio (25.6x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: PPG is poor value based on its PEG Ratio (1.6x)


Price to Book Ratio

PB vs Industry: PPG is overvalued based on its PB Ratio (5.9x) compared to the US Chemicals industry average (2.2x).


Next Steps

Future Growth

How is PPG Industries forecast to perform in the next 1 to 3 years based on estimates from 20 analysts?

11.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PPG's forecast earnings growth (16.1% per year) is above the savings rate (1.7%).

Earnings vs Market: PPG's earnings (12.6% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: PPG's earnings are forecast to grow, but not significantly.

Revenue vs Market: PPG's revenue (3% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: PPG's revenue (3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PPG's Return on Equity is forecast to be high in 3 years time (29.5%)


Next Steps

Past Performance

How has PPG Industries performed over the past 5 years?

3.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PPG has high quality earnings.

Growing Profit Margin: PPG's current net profit margins (8.2%) are lower than last year (8.6%).


Past Earnings Growth Analysis

Earnings Trend: PPG's earnings have grown by 2.4% per year over the past 5 years.

Accelerating Growth: PPG's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: PPG had negative earnings growth (-0.9%) over the past year, making it difficult to compare to the Chemicals industry average (-17%).


Return on Equity

High ROE: Whilst PPG's Return on Equity (22.88%) is high, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is PPG Industries's financial position?


Financial Position Analysis

Short Term Liabilities: PPG's short term assets ($6.8B) exceed its short term liabilities ($4.6B).

Long Term Liabilities: PPG's short term assets ($6.8B) do not cover its long term liabilities ($8.1B).


Debt to Equity History and Analysis

Debt Level: PPG's debt to equity ratio (103%) is considered high.

Reducing Debt: PPG's debt to equity ratio has increased from 54.2% to 103% over the past 5 years.

Debt Coverage: PPG's debt is well covered by operating cash flow (37.6%).

Interest Coverage: PPG's interest payments on its debt are well covered by EBIT (18x coverage).


Balance Sheet

Inventory Level: PPG has a high level of physical assets or inventory.

Debt Coverage by Assets: PPG's debt is covered by short term assets (assets are 1.2x debt).


Next Steps

Dividend

What is PPG Industries's current dividend yield, its reliability and sustainability?

1.62%

Current Dividend Yield


Upcoming Dividend Payment

Purchase PPG Industries before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.6%marketbottom25%1.4%markettop25%3.7%industryaverage2.2%forecastin3Years1.7%

Current dividend yield vs market & industry

Notable Dividend: PPG's dividend (1.57%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: PPG's dividend (1.57%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: PPG's dividends per share have been stable in the past 10 years.

Growing Dividend: PPG's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (38.4%), PPG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PPG's dividends in 3 years are forecast to be well covered by earnings (27.4% payout ratio).


Next Steps

Management

What is the CEO of PPG Industries's salary, the management and board of directors tenure and is there insider trading?

3.8yrs

Average management tenure


CEO

Michael McGarry (61yo)

4.3yrs

Tenure

US$11,784,405

Compensation

Mr. Michael H. McGarry has been the Chief Executive Officer and Chairman of the Board at PPG Industries, Inc. since September 1, 2015 and since September 1, 2016 respectively and served as its President si ...


CEO Compensation Analysis

Compensation vs Market: Michael's total compensation ($USD11.78M) is about average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Michael's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.8yrs

Average Tenure

53yo

Average Age

Experienced Management: PPG's management team is considered experienced (3.8 years average tenure).


Board Age and Tenure

9.1yrs

Average Tenure

64.5yo

Average Age

Experienced Board: PPG's board of directors are considered experienced (9.1 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$72,26324 May 19
Victoria Haynes
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares674.33
Max PriceUS$107.16

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Michael McGarry (61yo)

    Chairman & CEO

    • Tenure: 4.3yrs
    • Compensation: US$11.78m
  • Vince Morales (53yo)

    Senior VP & CFO

    • Tenure: 2.8yrs
    • Compensation: US$2.34m
  • Peg Curry

    Head of Corporate Business Communications & Administrative Secretary

    • Rebecca Liebert (50yo)

      Executive Vice President

      • Tenure: 1.6yrs
      • Compensation: US$5.53m
    • David Bem (50yo)

      VP of Science & Technology and CTO

      • Tenure: 3.8yrs
    • Tim Knavish (53yo)

      Executive Vice President

      • Tenure: 3.8yrs
      • Compensation: US$1.94m
    • Anne Foulkes (56yo)

      Senior VP & General Counsel

      • Tenure: 1.4yrs
    • Jeffrey Davies

      Vice President of Corporate Development

      • Tenure: 6.4yrs
    • Hervé Tiberghien

      Vice President of Human Resources

      • Tenure: 3.9yrs
    • John Bruno

      Director of Investor Relations

      • Tenure: 2.5yrs

    Board Members

    • John Faraci (69yo)

      Independent Director

      • Tenure: 7.3yrs
      • Compensation: US$280.09k
    • Jim Berges (72yo)

      Independent Director

      • Tenure: 19.3yrs
      • Compensation: US$290.09k
    • Hugh Grant (61yo)

      Independent Lead Director

      • Compensation: US$325.09k
    • Michele Hooper (67yo)

      Independent Director

      • Tenure: 25yrs
      • Compensation: US$270.09k
    • Victoria Haynes (72yo)

      Independent Director

      • Tenure: 16.3yrs
      • Compensation: US$285.09k
    • Steve Angel (63yo)

      Independent Director

      • Tenure: 9.1yrs
      • Compensation: US$280.09k
    • Martin Richenhagen (66yo)

      Independent Director

      • Tenure: 12.3yrs
      • Compensation: US$295.09k
    • Mike Lamach (55yo)

      Independent Director

      • Tenure: 4.8yrs
      • Compensation: US$270.09k
    • Michael McGarry (61yo)

      Chairman & CEO

      • Tenure: 4.3yrs
      • Compensation: US$11.78m
    • Melanie Healey (58yo)

      Independent Director

      • Tenure: 3.5yrs
      • Compensation: US$270.09k

    Company Information

    PPG Industries, Inc.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: PPG Industries, Inc.
    • Ticker: PPG
    • Exchange: NYSE
    • Founded: 1883
    • Industry: Specialty Chemicals
    • Sector: Materials
    • Market Cap: US$29.832b
    • Shares outstanding: 236.46m
    • Website: https://www.ppg.com

    Number of Employees


    Location

    • PPG Industries, Inc.
    • One PPG Place
    • Pittsburgh
    • Pennsylvania
    • 15272
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    PPGNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
    PPQDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
    PPG *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968
    0KEILSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
    PPQETLX (Eurotlx)YesCommon StockITEURJan 1968

    Biography

    PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials worldwide. The company’s Performance Coatings segment offers coatings, solvents, adhesives, sundries, and software for automotive and commercial transport/fleet repair and refurbishing, light industrial coatings, and specialty coatings for signs; and coatings, sealants, transparencies, transparent armor, adhesives, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft. It also provides coatings and finishes for the protection of metals and structures, such as metal fabricators, heavy duty maintenance contractors, and manufacturers of ships, bridges, and rail cars; and paints, wood stains, and purchased sundries for painting and maintenance contractors, and consumers for decoration and maintenance of residential and commercial building structures. The company’s Industrial Coatings segment provides coatings, adhesives and sealants, and metal pretreatments, as well as services and coatings applications for automotive original equipment manufacturers; appliances, agricultural and construction equipment, consumer electronics, automotive parts and accessories, building products, transportation vehicles and other finished products; and on-site coatings services. It also provides coatings for the protection, performance, and decoration of metal cans, closures, plastic tubes, industrial packaging, and promotional and specialty packaging. In addition, this segment offers amorphous precipitated silicas for tire, battery separator, and other end-uses; TESLIN substrates for labels, e-passports, drivers’ licenses, breathable membranes, and other loyalty and identification cards; and organic light emitting diode materials, displays and lighting lens materials, and optical lenses and color-change products. The company was founded in 1883 and is headquartered in Pittsburgh, Pennsylvania. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/22 23:47
    End of Day Share Price2020/01/22 00:00
    Earnings2019/12/31
    Annual Earnings2019/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.