PPG Industries (NYSE: PPG) and The Valspar Corp (NYSE:VAL) are both basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, analyst recommendations, profitabiliy, earnings, dividends and risk.
This table compares PPG Industries and The Valspar Corp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|The Valspar Corp||6.89%||27.08%||6.98%|
Risk & Volatility
PPG Industries has a beta of 1.54, suggesting that its share price is 54% more volatile than the S&P 500. Comparatively, The Valspar Corp has a beta of 1.63, suggesting that its share price is 63% more volatile than the S&P 500.
This is a summary of current ratings for PPG Industries and The Valspar Corp, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|The Valspar Corp||0||3||0||0||2.00|
PPG Industries currently has a consensus price target of $113.93, suggesting a potential upside of 8.36%. The Valspar Corp has a consensus price target of $110.50, suggesting a potential downside of 2.20%. Given PPG Industries’ stronger consensus rating and higher probable upside, equities research analysts clearly believe PPG Industries is more favorable than The Valspar Corp.
PPG Industries pays an annual dividend of $1.60 per share and has a dividend yield of 1.5%. The Valspar Corp pays an annual dividend of $1.48 per share and has a dividend yield of 1.3%. PPG Industries pays out 41.7% of its earnings in the form of a dividend. The Valspar Corp pays out 34.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. PPG Industries has raised its dividend for 44 consecutive years and The Valspar Corp has raised its dividend for 35 consecutive years. PPG Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
71.8% of PPG Industries shares are owned by institutional investors. Comparatively, 69.6% of The Valspar Corp shares are owned by institutional investors. 0.7% of PPG Industries shares are owned by insiders. Comparatively, 3.1% of The Valspar Corp shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares PPG Industries and The Valspar Corp’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|PPG Industries||$14.85 billion||1.82||$2.56 billion||$3.84||27.38|
|The Valspar Corp||N/A||N/A||N/A||$4.35||25.97|
PPG Industries has higher revenue and earnings than The Valspar Corp. The Valspar Corp is trading at a lower price-to-earnings ratio than PPG Industries, indicating that it is currently the more affordable of the two stocks.
PPG Industries beats The Valspar Corp on 9 of the 14 factors compared between the two stocks.
PPG Industries Company Profile
PPG Industries, Inc. manufactures and distributes a range of coatings and specialty materials. The Company has three segments: Performance Coatings, Industrial Coatings and Glass. The Performance Coatings segment includes the refinish, aerospace, protective and marine, architectural businesses. The Industrial Coatings segment includes the automotive original equipment manufacturer (OEM), industrial coatings, packaging coatings, coatings services and specialty coatings and materials businesses. The Glass segment includes the North American fiber glass business. The Company’s geographical segments include the United States, Canada, Western Europe, Latin America, Central and Eastern Europe, the Middle East, Africa and Asia Pacific. The Company’s brands include PPG, GLIDDEN, COMEX, OLYMPIC, DULUX, SIKKENS, PPG PITTSBURGH PAINTS, MULCO, FLOOD, LIQUID NAILS, SICO, CIL, RENNER, TAUBMANS, WHITE KNIGHT, BRISTOL, HOMAX, DEKORAL, TRILAK, GORI, and BONDEX, among others.
The Valspar Corp Company Profile
The Valspar Corporation is engaged in developing, manufacturing and distributing a range of coatings, paints and related products. The Company operates through two segments: Coatings and Paints. The Coatings segment includes its industrial product lines and packaging product line. The Company offers decorative and protective coatings for metal, wood and plastic primarily for sale to original equipment manufacturing (OEM) customers in Africa, Asia, Australia, Europe, North America and South America. The Paints segment includes consumer paints and automotive paint refinishes product lines. The Company offers a range of paints, primers, topcoats and aerosol spray paints through retailers, distribution networks and the Company-owned stores. The Company offers a portfolio of interior and exterior decorative paints, stains, primers, varnishes and specialty decorative products, such as enamels, aerosols and faux finishes, used in both the do-it-yourself and professional markets.
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