PPG’s “New PPG” is a higher-quality performance coatings compounder hiding behind Refinish destocking noise—potentially mispriced at ~14x earnings ahead of an aerospace-driven upcycle and aggressive buybacks.
Overview
PPG Industries (NYSE: PPG) is at a strategic and valuation inflection point in late January 2026 after major divestitures and restructuring that materially change the quality of earnings. At ~$110–$114 per share (about $113.89 on Jan 24, 2026), PPG trades around ~14–14.5x forward earnings on FY2025 guidance of $7.60–$7.70—well below Sherwin-Williams’ >30x multiple and modest versus high-quality industrial compounders. The market is discounting PPG due to 2025 turbulence, especially distributor destocking in Automotive Refinish and uncertainty from the 2025 tariff regime. The report argues this pessimism underappreciates the structural improvement from exiting the commoditized U.S./Canada architectural retail market (~$2B revenue, margin dilutive) and focusing on higher-barrier performance coatings (Aerospace, Auto OEM technology coatings, Packaging, Protective & Marine). Management under CEO Tim Knavish is executing a $175M cost-savings plan (including ~1,800 reductions) and intends to deploy divestiture proceeds into accelerated buybacks, supporting EPS even in a flat revenue environment. The medium-term outlook is driven by an Aerospace “super-cycle” (record ~$310M backlog and OEM/MRO strength) and the critical question of whether Refinish normalizes in early 2026. If stabilization occurs, the risk/reward skews favorable for investors willing to look beyond 2026 transition volatility.