Summary
- PPG Industries generates approximately $1.5B per year in free cash flow.
- That's a lot of money, but the free cash flow yield is just 5.4%, and that's a bit low.
- PPG has been very generous to its shareholders in 2018 as it returned $2.2B in dividends and share buybacks.
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Introduction
Considering PPG Industries (PPG) is a well-known name in the financial world and the world of coatings - it’s the second largest paint company in the world, ahead of AkzoNobel (OTCQX:AKZOF) (OTCQX:AKZOY) but trailing Sherwin-Williams (SHW) - I don’t think a lengthy introduction is necessary.
Data by YChartsWhat really matters are the cash flows, and although PPG Industries was able to increase its 2018 revenue by almost 5%, its operating expenses increased at a much faster pace, which definitely created some margin pressure. Nothing insurmountable, but I get a bit itchy when I see companies spending a tonne of money on share buybacks and dividends in a period of decreasing margins.
