PPG Industries (PPG) Stock Analysis

PPG Industries Dividend

The PPG Industries (PPG) dividend has been paid every year since 1899 and increased for 53 consecutive years; qualifying the company as a Dividend King. The firm is one of the oldest and largest global producers of coatings and glass.

Current Dividend Annualized: $2.72

PPG Industries (PPG) Intrinsic Value – Margin of Safety Analysis            

(updated December 2024)

Normalized Diluted Earnings Per Share (TTM): $6.31
Free Cash Flow Per Share (TTM): $5.43
Cash Flow From Operations (CFO) Per Share: (TTM): $8.36

Estimated Intrinsic Value: $113

Target Buy Price Based on Required Margin of Safety =  $81
(Required Margin of Safety Based On Risk Stability Grade:

A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)

Target SELL Price Based on Estimated Intrinsic Value = $130
(Allow Overvaluation Adjusted by Risk Stability Grade:

A = 40%, B = 25%, C = 15%, D = 5%, F = 0%)

Risk / Stability Grade: C

A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.

B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.

C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.

D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.

F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.

Financial Risk Grade: C

A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.

B grade indicates a very low probability for a dividend cut.

C grade indicates a low probability for a dividend cut and/or average safety risk.

D grade indicates there are issues that should be considered concerning future dividend payments.

F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.

Business Quality Grade: B

A grade indicates earnings quality is high or far above average.

B grade indicates earnings quality is good and/or above average.

C grade indicates earnings quality is acceptable or average.

D grade indicates earnings quality is poor and requires thoughtful due diligence.

F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.

Earnings Report: 9/30/24

AAAMP Portfolios Position Disclosures:
Treasure Trove Dividend (TTD) – None
Global Dividend Value (GDV) – None
Dividend Growth & Income (DGI) – None
Global Value (GV) – None
Global Value Aggressive (GVA) –  None
Global Conservative Income (GCI) – None
Global High Income (GHI) – None

Description

Sector: Basic Materials
Industry: Specialty Chemicals

PPG is a global producer of coatings. The company is the world’s largest producer of coatings after the purchase of selected AkzoNobel assets.

PPG’s products are sold to a wide variety of end users, including the automotive, aerospace, construction, and industrial markets.

The company has a footprint in many regions around the globe, with less than half of sales coming from North America in recent years. PPG is focused on its coatings and specialty products and expansion into emerging regions, as exemplified by the Comex acquisition.

SWOT Analysis For PPG Industries

Strengths

PPG Industries is the largest manufacturer of coatings in the world. It excels at being a specialty and services company to customers in a wide variety of industries including construction and transportation.

The company has been divesting itself from commodified businesses and increasing its product mix toward coatings. Its ability to have working relationships with specialty clients allows the company to compete less on price and more on quality and performance.

Its competitive advantages include outstanding management and strong brands such as Glidden, Comex, Olympic, PPG Pittsburgh Paints, and Liquid Nails.

Weaknesses

Much of PPG profits are tied to cyclical end markets such as automotive, housing, and construction. In addition, products such as paint and glass are not specialized and require the company to compete essentially on price. This puts downward pressure on profit margins.

Opportunities

PPG has an aggressive acquisition strategy that has involved acquiring dozens of businesses over the past 20 years. This has led to accelerated earnings growth. This strategy has also demonstrated management’s ability to acquire and integrate businesses that were a good fit for PPG.

Threats

Sales are highly dependent on the global economy and health of its end markets. Reliance on energy and certain raw materials make PPG susceptible to increased costs that may or may not be able to be passed on to customers. Health and safety factors such as regulations and lawsuits are always a concern in the chemicals industry.

Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.