Does PPG Industries’ 2025 Valuation Reflect Its Shift Toward Specialty Coatings And Cash Flow Growth?

• If you are wondering whether PPG Industries at around $103 a share is a quietly attractive value play or a value trap in disguise, this article will walk through what the numbers are really saying.
• Over the last week the stock is up 2.5%, extending a 6.2% move over the past month, but that still sits against a softer backdrop with returns of -10.3% year to date and -14.4% over the last year.
• Recent headlines have focused on PPG's strategic push into higher value, specialty coatings and sustainability driven products, areas that could support pricing power over time. At the same time, the company has been reshaping its portfolio and cost base. These moves help explain why the market is slowly reconsidering its longer term prospects despite a choppy share price history.
• Right now PPG scores a solid 5/6 on our valuation checks, suggesting it screens as undervalued on most of the key metrics we track. Next we will unpack those different valuation approaches before finishing with a more holistic way to think about what the stock is really worth.

Find out why PPG Industries's -14.4% return over the last year is lagging behind its peers.

Approach 1: PPG Industries Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company might be worth by projecting the cash it can generate in the future, then discounting those cash flows back to today to reflect risk and the time value of money.

For PPG Industries, the latest twelve month free cash flow is about $794 million. Analysts and internal estimates see this rising steadily, with projected free cash flow reaching roughly $1.83 billion by 2029 and continuing to grow towards $2.40 billion by 2035. These projections combine analyst forecasts for the next few years and Simply Wall St extrapolations thereafter, all in dollars.

Discounting that stream of cash flows using a 2 Stage Free Cash Flow to Equity model yields an estimated intrinsic value of $164.22 per share. Compared with the current share price of around $103, the DCF implies that PPG trades at a 36.9% discount to its calculated fair value. This suggests the market may be underestimating its long term cash generation potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests PPG Industries is undervalued by 36.9%. Track this in your watchlist or portfolio, or discover 903 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for PPG Industries.

Approach 2: PPG Industries Price vs Earnings

For profitable, established businesses like PPG Industries, the price to earnings ratio is often a clear way to gauge how much investors are willing to pay for each dollar of current earnings. It links directly to profitability today, which tends to be more stable and comparable across mature companies than sales or book value.

In general, faster growth and lower perceived risk justify a higher PE multiple, while slower growth or higher uncertainty should pull that multiple down. PPG currently trades on a PE of about 18.3x, which is below both the Chemicals industry average of roughly 24.0x and the peer group average of about 22.5x. On those simple comparisons alone, the stock appears modestly cheap.

Simply Wall St goes a step further by estimating a Fair Ratio of 21.8x for PPG. This is a proprietary view of what the PE should be once factors such as earnings growth, profit margins, industry dynamics, company size and specific risks are all taken into account. Because it incorporates these fundamentals, the Fair Ratio is more tailored than a blunt comparison to peers or the sector. With the current PE sitting meaningfully below the 21.8x Fair Ratio, the multiple-based view also points to PPG trading at a discount to this assessment of fair value at today’s price.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your PPG Industries Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of PPG Industries’ future with a concrete forecast and fair value. A Narrative is your story behind the numbers, where you set assumptions for revenue growth, margins and future PE, and then link that story to a calculated fair value so you can compare it directly to today’s share price. On Simply Wall St, Narratives live in the Community page and are used by millions of investors, making it easy to explore different perspectives and build your own. Because each Narrative is tied to live data, it updates dynamically as new news, earnings or guidance comes in, so your investment framework stays current without extra work. For example, one PPG Narrative might assume strong smart coatings adoption and see fair value closer to about $153 per share, while another more cautious view might sit nearer $118. By comparing those fair values to the current price you can quickly decide which story you believe and whether the stock looks attractive or not.

Do you think there's more to the story for PPG Industries? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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