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

Institutional and Insider 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 company insiders. Comparatively, 3.1% of The Valspar Corp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

PPG Industries has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500. Comparatively, The Valspar Corp has a beta of 1.63, indicating that its share price is 63% more volatile than the S&P 500.

Earnings and Valuation

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

Analyst Ratings

This is a summary of current recommendations and price targets for PPG Industries and The Valspar Corp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PPG Industries 0 9 6 0 2.40
The Valspar Corp 0 3 0 0 2.00

PPG Industries presently has a consensus target price of $113.93, suggesting a potential upside of 8.36%. The Valspar Corp has a consensus target price of $110.50, suggesting a potential downside of 2.20%. Given PPG Industries’ stronger consensus rating and higher probable upside, analysts plainly believe PPG Industries is more favorable than The Valspar Corp.

Dividends

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 increased its dividend for 44 consecutive years and The Valspar Corp has increased 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.

Profitability

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
PPG Industries 6.79% 29.47% 9.49%
The Valspar Corp 6.89% 27.08% 6.98%

Summary

PPG Industries beats The Valspar Corp on 9 of the 14 factors compared between the two stocks.

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.

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.

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