The Valspar Corp (NYSE: VAL) and PPG Industries (NYSE:PPG) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitabiliy.

Earnings and Valuation

This table compares The Valspar Corp and PPG Industries’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Valspar Corp N/A N/A N/A $4.35 25.97
PPG Industries $14.78 billion 1.85 $2.55 billion $3.27 32.64

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.

Institutional & Insider Ownership

69.6% of The Valspar Corp shares are held by institutional investors. Comparatively, 71.6% of PPG Industries shares are held by institutional investors. 3.1% of The Valspar Corp shares are held by company insiders. Comparatively, 0.7% of PPG Industries shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares The Valspar Corp and PPG Industries’ 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%
PPG Industries 5.79% 30.40% 9.61%

Dividends

The Valspar Corp pays an annual dividend of $1.48 per share and has a dividend yield of 1.3%. PPG Industries pays an annual dividend of $1.60 per share and has a dividend yield of 1.5%. The Valspar Corp pays out 34.0% of its earnings in the form of a dividend. PPG Industries pays out 48.9% 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. The Valspar Corp has increased its dividend for 44 consecutive years and PPG Industries has increased its dividend for 35 consecutive years.

Volatility & Risk

The Valspar Corp has a beta of 1.63, meaning that its share price is 63% more volatile than the S&P 500. Comparatively, PPG Industries has a beta of 1.56, meaning that its share price is 56% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for The Valspar Corp and PPG Industries, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Valspar Corp 0 3 0 0 2.00
PPG Industries 0 7 8 0 2.53

The Valspar Corp currently has a consensus target price of $110.50, indicating a potential downside of 2.20%. PPG Industries has a consensus target price of $114.85, indicating a potential upside of 7.61%. Given PPG Industries’ stronger consensus rating and higher possible upside, analysts clearly believe PPG Industries is more favorable than The Valspar Corp.

Summary

PPG Industries beats The Valspar Corp on 8 of the 14 factors compared between the two stocks.

About The Valspar Corp

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.

About PPG Industries

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.

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