- If you are wondering whether PPG Industries at around US$98 per share still represents good value, the recent share price performance gives you plenty to think about.
- The stock has seen a 2.3% decline over the last 7 days, a 23.8% decline over the last 30 days, and is currently showing returns of 5.7% decline year to date, 9.2% decline over 1 year, 14.9% decline over 3 years, and 28.6% decline over 5 years.
- Recent coverage has focused on how the share price performance compares with the broader chemicals sector and how investors are reassessing established materials names in light of changing sentiment and capital allocation priorities. This context helps frame whether the recent pullback is being treated as a reset in expectations or simply part of a longer period of weaker returns.
- Against this backdrop, PPG Industries currently has a valuation score of 6 out of 6 on Simply Wall St's checks. The next sections will break down what that means using different valuation methods, and will conclude with a broader way to think about value that goes beyond the numbers alone.
Find out why PPG Industries's -9.2% return over the last year is lagging behind its peers.
Approach 1: PPG Industries Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today to reflect the time value of money and risk.
For PPG Industries, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flows in $. The latest twelve month free cash flow is about $1.27b. Analysts supply explicit forecasts for several years, and Simply Wall St then extends those projections. By 2029, free cash flow is projected at $1.78b, with further extrapolated estimates running out to 2035.
When all of these projected cash flows are discounted back to today, the DCF model arrives at an estimated intrinsic value of about $159.83 per share. Compared with a current share price around $98, this indicates the stock is 38.4% undervalued according to this method.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests PPG Industries is undervalued by 38.4%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.
Approach 2: PPG Industries Price vs Earnings
P/E is a common yardstick for profitable companies because it ties what you pay directly to the earnings each share generates. It gives you a quick sense of how many dollars investors are currently willing to pay for one dollar of earnings.
What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk. Higher expected growth or lower perceived risk can support a higher multiple, while slower growth or higher risk usually calls for a lower one.
PPG Industries is currently trading on a P/E of 14.0x. That sits well below the Chemicals industry average of 27.2x and the broader peer group average of 30.1x. Simply Wall St’s Fair Ratio for PPG Industries is 21.9x, which aims to capture what a justified P/E might look like after considering factors such as earnings growth, profit margins, industry, market cap and key risks.
This Fair Ratio is designed to be more tailored than simple peer or industry comparisons because it adjusts for company specific characteristics instead of assuming all businesses deserve the same multiple. With the actual P/E of 14.0x sitting below the Fair Ratio of 21.9x, this approach points to the shares being undervalued on an earnings basis.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your PPG Industries Narrative
Earlier it was mentioned that there is an even better way to think about valuation. Narratives take the next step by letting you attach a clear story about PPG Industries to the numbers you care about, linking your view of its future revenue, earnings and margins to a concrete forecast and a fair value that you can compare directly with today’s share price.
On Simply Wall St’s Community page, Narratives are an easy tool that investors use to set their own assumptions and fair value, see how that stacks up against others, and then decide whether the gap between Fair Value and Price looks wide enough to consider buying, holding or selling. Those views are automatically refreshed when new earnings, news or guidance arrives.
For PPG Industries, one Narrative might be more optimistic, using a higher fair value such as about US$152.76 based on stronger revenue growth and profit margins. A more cautious Narrative might sit closer to about US$125.75. Seeing that spread helps you decide which story about the company’s future you find more convincing and what that implies for your own decision making.
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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