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PPG Industries Inc PPG

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Morningstar’s Analysis

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PPG's Fourth Quarter Was Lackluster, but 2021 Should Yield a Return to Growth

Charles Gross Equity Analyst

Analyst Note

| Charles Gross |

PPG's share price may have risen roughly 16% during the fourth quarter, but financial results tell a different story. Sharp year-over-year improvement during the third quarter softened as the year wrapped up as COVID-19 cases surged again. Fourth-quarter sales improved 2% from the prior year to $3.76 billion, due mostly to currency movements and acquisitions. Business-oriented end uses performed nicely in the fourth quarter, but consumer-oriented uses were a drag. Heading into 2021, we think PPG will turn the corner, growing sales and earnings. However, investors should expect growth to be more robust in the back half of the year, as flying and driving activity is poised to remain depressed until coronavirus vaccination becomes more widespread. Our $87 per share fair value estimate and narrow moat ratings stand. With shares trading about 61% above our fair value estimate, they look substantially overvalued. 

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Company Profile

Business Description

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.

One PPG Place
Pittsburgh, PA, 15272
T +1 412 434-3131
Sector Basic Materials
Industry Specialty Chemicals
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 46,900