PPG

PPG is a high-quality, durable franchise priced for what it is — a mature, no-growth industrial coatings company. FY2025 revenue of $15.9B was essentially flat (+0.2% YoY) and remains below the $16.8B of FY2021, with management's own MD&A attributing the result to +1% price, +1% volume and +1% FX being offset by -3% from divestitures. The headline financials look great in isolation: net income +41.2% to $1.58B, diluted EPS +46.1% to $6.94, ROE 19.8%, and operating cash flow +36.7% to $1.94B. But most of the GAAP earnings jump is optical — the MD&A shows income before taxes rose only $193M, driven largely by far lower restructuring ($6M vs $233M) and impairment ($24M vs $146M) charges versus 2024, plus a lower 22.4% tax rate. Tellingly, adjusted diluted EPS from continuing operations actually fell -3.7% to $7.58, signaling that core profitability did not improve.

The balance sheet is sound but trending the wrong way on leverage: long-term debt rose 35.4% to $6.60B and liabilities/equity sits at 1.76x, though this is partly cushioned by a 70.3% jump in cash to $2.16B and healthy current assets of $7.96B against $4.90B current liabilities. Capital returns are steady and meaningful — $790M of buybacks (shares down 1.5%) and $628M of dividends — comfortably covered by the $1.94B operating cash flow net of $778M capex.