PPG INDUSTRIES INC (PPG): what the price requires
At today's price, PPG INDUSTRIES INC (PPG) is priced for -3.3% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/PPG
Headline
| Field | Value |
|---|---|
| Ticker | PPG |
| Company | PPG INDUSTRIES INC |
| Current price | $113.53/sh |
| Composition | Global Architectural Coatings 24% / Performance Coatings 35% / Industrial Coatings 41% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.9% |
| Operating margin today | 16.8% |
| Margin compression implied | -8.9pp |
| Implied growth | -3.3% |
| Multiple paid | 12x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.6pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.87σ |
| cohort percentile (of 76 peers) | 21 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.49x | 5 | expensive |
| Earnings | 1.35x | 4 | expensive |
| Relative | 1.05x | 5 | expensive |
| Growth | 0.56x | 3 | justifies |
Families that justify the price: Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.1%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $333.89 | 0.34x | yes | FCF base $1.6B, growth 16% (input: historical growth), terminal g 4.0%, WACC 7.1%, 6yr projection |
| DCF Exit Multiple | Growth | $204.51 | 0.56x | yes | Exit EV/EBITDA: 10.4x / 12.4x / 14.4x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $96.29 | 1.18x | yes | P/E 14x (static sector reference · 2026-04), scenarios: 11.4x / 14.0x / 16.6x (bear / base = reference held flat / bull), EV/EBITDA 9.32x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $76.36 | 1.49x | yes | BV/sh $36.11, ROE (TTM) 19.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $109.82 | 1.03x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $133.26 | 0.85x | yes | Rev $16.1B, growth 16% (input: historical growth; tapered), Terminal P/S: 1.3x / 1.6x / 1.9x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $245.35 | 0.46x | yes | EPS $7.01, growth 35% (input: historical EPS growth), PEG=0.46 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $94.41 | 1.20x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $2.39B × (1−26%) / WACC 7.1% → EPV (no growth) |
| Residual Income | Asset | $106.90 | 1.06x | yes | BV $36.11 + 5yr PV of (ROE (TTM) 19.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $75.47 | 1.50x | yes | √(22.5 × EPS $7.01 × BVPS $36.11) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $62.43 | 1.82x | yes | EBITDA $2.61B × sector EV/EBITDA 8.0x |
| FCF Yield | Earnings | $28.60 | 3.97x | yes | FCF $1227.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $226.19 | 0.50x | yes | EPS $7.01 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $16.14 | 7.03x | yes | BV $36.11 × (ROIC 3.2% / WACC 7.1%) |
| P/Sales Sector | Relative | $107.76 | 1.05x | yes | Revenue $16.12B × sector P/S 1.5x |
| PEG Fair Value | Relative | $262.88 | 0.43x | yes | EPS $7.01 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $75.78 | 1.50x | yes | EPS $7.01 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $6.2b |
| Net debt / NOPAT (after-tax) | 3.13x |
| Net debt / operating income (pre-tax) | 2.33x |
| Interest coverage | 11.0x |
| Share count CAGR (buyback) | -1.5% |
| Burning cash | no |
Bullet Takeaways
- PPG is a global coatings maker split across three units: Industrial Coatings at about 41% of sales, Performance Coatings at 35%, and Global Architectural Coatings at 24%. A single multiple blends a steady aerospace and refinish business with a more cyclical industrial one.
- The recent story is self-help: a fifth straight quarter of organic growth, architectural segment income up over 30%, restructuring with European plant closures, and a 2024 reshaping that divested the lower-margin North American architectural and silica businesses.
Bull Case
A blended multiple on PPG misses that this is three businesses with different economics stitched into one ticker, and the mix has been deliberately upgraded. Industrial Coatings is the largest piece and the most cyclical, tied to automotive OEM and packaging. Performance Coatings, the segment carrying the priced-in premium, is the higher-quality engine: it houses aerospace, refinish, protective and marine, and traffic solutions, the kind of specified, technology-advantaged products that command pricing power. The filing describes that segment as supplying "a variety of coatings, solvents, adhesives, sealants and finishes, along with pavement marking products, transparencies and paint films" (FY2025 10-K), and it is growing: aerospace expanded double digits and protective and marine coatings rose a double-digit percentage with management noting demand for "technology-advantaged products" (FY2025 10-K).
The operating story is one of self-help paying off. PPG reported a fifth consecutive quarter of organic sales growth in the first quarter of 2026, with adjusted EPS of $1.83 up 6% and above guidance, on higher selling prices and flat volumes. Global architectural coatings segment income rose over 30%, lifting that segment's EBITDA margins by 230 basis points. Management is executing structural restructuring worth $50 million in 2026 and another $50 million in 2027, including the closure of four European plants to lower fixed cost. The 2024 portfolio reshaping, divesting the lower-margin U.S. and Canada architectural and silica businesses, already lifted adjusted EBITDA margin and sharpened the focus.
On valuation, the price is undemanding for a global franchise. PPG carries moderate leverage, net debt of about $6.2 billion against $2.7 billion of operating income, with interest coverage near 11 times, and it buys back stock. This is a quality industrial trading at a reasonable price while management improves the mix, not a stretched bet.
Bear Case
Read the models against each other and the disagreement is instructive: the relative-multiple frame supports the price, but the earnings-power and free-cash-flow methods land below it, in the high $20s to low $70s. When the peer comparison says fair and the cash-based methods say expensive, the cash methods are usually the more honest read, because they price the business on what it generates rather than on what the market currently pays for a coatings peer. The free-cash-flow method near $29 is the caution flag: it says a meaningful part of the current price rests on a recovery in volumes that has not yet arrived. The first quarter grew on price with flat volumes, and price-led growth without volume is not durable indefinitely.
The competitive and cost pressures are the structural exposure. PPG operates in a market with formidable rivals; its own filing names "Akzo Nobel N.V., Axalta Coating Systems" among global competitors, and in architectural paint Sherwin-Williams is the larger, more vertically integrated leader in North America. Coatings is a raw-material-intensive business, and management has flagged mid-single-digit cost-of-goods inflation, driven in part by Middle East conflict raising raw material, energy, and logistics costs. When input costs rise faster than PPG can pass them through, margins compress, and pricing power varies by segment.
The cyclicality and execution risk round out the bear case. Industrial Coatings, the largest segment, depends on automotive OEM and general industrial demand, and management has noted regional mix headwinds and difficult China comparisons in automotive. The architectural margin gain that flattered the quarter came partly from the portfolio reshaping rather than underlying demand, so it may not repeat at the same pace. If volumes stay flat, raw materials stay elevated, and the automotive cycle softens, the self-help story stalls and the price, already above where the cash methods land, has little support.
Valuation
Because PPG is multi-segment, the inversion isolates the segment carrying the priced-in premium, Performance Coatings, and asks what operating growth the price implies for it. The answer is about negative 3.8% per year for five years at an 8.7% cost of capital, a low bar that sits in the lower half of the peer multiple range. The price is not demanding growth from the premium segment; it is pricing in slight decline, which is a forgiving assumption for a business with aerospace and refinish exposure.
Across the whole company the valuation families split. The relative-multiple methods support the $118.22 price (June 27, 2026), while the asset-based and earnings-power methods read it as expensive, and the free-cash-flow methods land well below. The sensitivity is moderate, with each one-point move in the cost of capital shifting the implied segment growth by about 6.3 points.
The honest conclusion is that PPG looks reasonably valued to modestly cheap on forward and peer frames, but full on the cash-based methods, and the gap is the volume question. An investor is paying a fair price for a quality coatings franchise and underwriting a volume recovery for the upside.
Catalysts
The near-term catalysts are organic growth momentum and the restructuring payoff. PPG posted a fifth consecutive quarter of organic sales growth in the first quarter of 2026, with adjusted EPS of $1.83 up 6% and above guidance, led by double-digit aerospace growth and a more than 30% jump in architectural segment income. Management reaffirmed full-year 2026 EPS guidance of $7.70 to $8.10 and guided the second quarter to flat-to-low-single-digit organic sales and adjusted EPS growth. Structural restructuring is set to deliver $50 million of benefit in 2026 and another $50 million in 2027, with four European plant closures in the second half of 2026.
The cost and demand backdrop is the swing factor. Management assumes a mid-single-digit increase in cost of goods sold for the rest of the year, driven partly by Middle East conflict raising raw material, energy, and logistics costs, and the automotive OEM segment faces regional mix headwinds and tough China comparisons. A turn in volumes, particularly in industrial and automotive demand, would convert the price-led growth into something more durable.
The portfolio and capital-allocation story continues after the 2024 divestitures of the North American architectural and silica businesses sharpened the mix. Analyst sentiment leans Buy-to-Hold, with price targets clustered in the $120s to $140s, and recent target increases from BMO and Citigroup. PPG pays a steady dividend and repurchases shares. Sherwin-Williams and Axalta remain the competitive reference points.
Sources:
- https://www.stocktitan.net/sec-filings/PPG/8-k-ppg-industries-inc-reports-material-event-5c74bcc643ba.html
- https://www.investing.com/news/transcripts/earnings-call-transcript-ppg-industries-q1-2026-beats-earnings-expectations-stock-dips-93CH-4645290
- https://www.european-coatings.com/news/markets-companies/ppg-announces-q1-2026-results-with-7-sales-growth/
- https://www.gurufocus.com/news/8930465/ppg-maintains-rating-by-citigroup-price-target-raised-to-125
- https://finance.yahoo.com/news/ppg-divest-us-canada-architectural-094851591.html
Peer Cohorts (Per Segment, With Filing Citations)
Global Architectural Coatings / Performance Coatings (reported)
- SHW (THE SHERWIN-WILLIAMS COMPANY)
- (no filing in the citation store)
- RPM (RPM International Inc.)
- (no filing in the citation store)
- AXTA (AXALTA COATING SYSTEMS LTD.)
- (no filing in the citation store)
Industrial Coatings (reported)
- AXTA (AXALTA COATING SYSTEMS LTD.)
- (no filing in the citation store)
- RPM (RPM International Inc.)
- (no filing in the citation store)
- AVNT (AVIENT CORPORATION)
- (no filing in the citation store)
- FUL (FULLER H B CO)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.