QPD In Action – 4Q23

QPD In Action – 4Q23

This quarter we paint our Quality | Price | Discipline process by featuring the world's second largest coating/painting business, PPG Industries.

PPG Industries (PPG)

We believe PPG is well positioned for margin recovery & expansion in 2024, given the 2+ year decline in oil prices/input costs and volumes recovering in auto OEM and commercial aero, in particular.


 “2023 and 2024 has been and will continue to be a process of recovering margins to pre-COVID levels. The stock got cheap in 3Q23 with the broader sell-off and did not seem to account for the company-specific earnings growth levers for 2024  –  the still recovering end markets, the full year impact of 2023 price increases, and now falling raw material prices.”
Colin Dunn – Cambiar Materials Analyst


Key Facts

  • PPG is the second-largest coatings/paint company in the world. The industry has attractive returns on capital and compelling market structure, with PPG holding a strong market position, ranked #1 or #2 across most end markets.
  • PPG is more diversified than many peers like Sherwin Williams, with exposure to residential re-paint (think DIY painting), auto OEM paint, auto re-finish, commercial aero, marine, and industrial. The company is also geographically diversified.





PPG adheres to Cambiar’s stringent quality underwriting policy, including:

  • Strong (and improving) margins and market-leading returns on capital and cash conversion.
  • High (and growing) market share across diversified end markets and geographies.
  • Robust R&D engine with a history of building new technologies and applications.

Cambiar identified an attractive entry point characterized as:

  • Stock trading near multi-year low P/E valuation.
  • Stock trading near multi-year low Price/Sales ratio, Price/Book ratio, and EV/EBITDA ratio.


  • Valuation became attractive in Q3 after broader market sell-off which did not credit PPG for company-specific growth levers, recovering end markets in 2024, price increases, and falling raw material prices.
  • Took the opportunity to add high-quality industrial exposure with strong balance sheet, good FCF dynamics, and reasonable valuation vs broader market.
  • Transitory cyclical concerns should normalize in coming quarters, catalyzing a re-rating.


SECURITY FOUND IN FOLLOWING PORTFOLIO(s): Large Cap Value, Opportunity Fund, Aggressive Value ETF, & Global Equity
Colin Dunn, CFA




Certain information contained in this communication constitutes “forward-looking statements”, which are based on Cambiar’s beliefs, as well as certain assumptions concerning future events, using information currently available to Cambiar.  Due to market risk and uncertainties, actual events, results or performance may differ materially from that reflected or contemplated in such forward-looking statements. The information provided is not intended to be, and should not be construed as, investment, legal or tax advice.  Nothing contained herein should be construed as a recommendation or endorsement to buy or sell any security, investment or portfolio allocation.  Securities highlighted or discussed have been selected to illustrate Cambiar’s investment approach and/or market outlook and are not intended to represent the performance or be an indicator for how the accounts have performed or may perform in the future. The portfolios are actively managed and securities discussed may or may not be held in client portfolios at any given time.

Any characteristics included are for illustrative purposes and accordingly, no assumptions or comparisons should be made based upon these ratios. Statistics/charts may be based upon third-party sources that are deemed to be reliable; however, Cambiar does not guarantee its accuracy or completeness.  Past performance is no indication of future results.  All material is provided for informational purposes only, and there is no guarantee that the opinions expressed herein will be valid beyond the date of this communication.

Source: Cambiar Analysis & PPG company disclosure