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PPG Industries (PPG): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q3 2026, to Sep 30, 2026, filed Oct 28, 2026; rules v1.1
PPG Industries (PPG): 1 rule of 10 triggered on the filings to Sep 30, 2026: FCF growth = the business improved; 2 with insufficient data; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
FCF growth = the business improved Triggered · severity medium · confidence medium
Free cash flow rose $464M (+66%), from $699M to $1.2B, but working capital released $338M more cash than the year before: 73% of the increase came from sources that need not repeat. Operating cash flow before working capital rose by $183M.
Innocent reading: An expansion programme finished, so capex fell back to maintenance levels for good.
Every rule
A01 FCF growth = the business improved Triggered severity medium · confidence medium
Free cash flow rose $464M (+66%), from $699M to $1.2B, but working capital released $338M more cash than the year before: 73% of the increase came from sources that need not repeat. Operating cash flow before working capital rose by $183M.
The figures and how they are read
| Fiscal year before | FY2024 |
| Fiscal year | FY2025 |
| Operating cash flow, year before | $1.4B |
| Operating cash flow | $1.9B |
| Capex, year before | $721M |
| Capex | $778M |
| Free cash flow, year before | $699M |
| Free cash flow | $1.2B |
| Change in FCF | $464M |
| Change in capex | $57M |
| Working capital: change in its cash contribution | $338M |
| Of which: capex cut | 0.00 |
| Of which: working capital released | $338M |
| Share of the increase that need not repeat | +72.8% |
| Operating cash flow before working capital: change | 183000000.00 |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY2025 (cash flow statement, fiscal year) · FY2024 (cash flow statement, fiscal year before)
What would explain it innocently
- An expansion programme finished, so capex fell back to maintenance levels for good
- Suppliers agreed longer payment terms in a contract
- Inventory was brought down after a glut and will stay down
What to look for in the filing
- Maintenance capex (what it costs to keep the assets working)
- Supplier payment terms and any supply-chain financing
- Management's capex guidance for next year
What would show the trap does not apply
- Next year's FCF holds or rises with capex back at its earlier level and working capital no longer releasing cash
- The 10-K's capex guidance and the segment capex show the cut is a completed programme, not deferral
- The working-capital release matches a disclosed change in terms or a divestiture, not stretched payables or a collection push
Look again: next filing.
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 0.3% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY2025 |
| Stock compensation | $46M |
| Revenue | $15.9B |
| SBC / revenue | +0.3% |
| Buybacks | $790M |
| Buybacks / SBC | 17.2 |
| Diluted shares, year before | 234.9M shares |
| Diluted shares | 227.1M shares |
| Diluted shares: change | -3.3% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY2025 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not triggered confidence medium
Receivables grew 4% against revenue 7% in Q3 2026; DSO 82 against a median of 80: collections are keeping pace with sales.
The figures and how they are read
| Quarter | Q3 2026 |
| Revenue, year over year | +6.6% |
| Receivables, year over year | +3.7% |
| Quarter before | Q2 2026 |
| Revenue y/y, quarter before | +7.1% |
| Receivables y/y, quarter before | +0.5% |
| Days sales outstanding | 82.1 |
| DSO, median of eight quarters | 80.3 |
| Receivables | $3.9B |
| Revenue | $4.4B |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q3 2026 (receivables and revenue) · Q3 2025 (the same quarter a year earlier)
B08 Adjusted profit = economic profit Insufficient data
no reconciliation table read from the releases yet and fewer than three quarters with both an adjusted and a GAAP EPS
C02 Low net debt = no refinancing risk Not triggered confidence medium
$702M comes due within a year, 4.2× covered by cash and investments of $1.6B plus $1.3B of free cash flow.
The figures and how they are read
| Cash and investments | $1.6B |
| Debt | $6.8B |
| Net debt | $5.2B |
| Due within a year | $702M |
| Read from | the debt maturity table |
| Free cash flow, twelve months | $1.3B |
| Cash plus free cash flow | $2.9B |
| Coverage of what is due | 4.2 |
| Due in the second year | $702M |
| Balance sheet date | 2026-09-30 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: FY2025 (debt maturities, cash and investments)
D03 EPS growth = profit growth Not triggered confidence high
EPS rose 1% and net income fell 0% in Q3 2026; the share count fell 1.5%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q3 2026 |
| Quarter before | Q3 2025 |
| EPS, year before | $2.00 |
| EPS | $2.02 |
| Net income, year before | $453M |
| Net income | $451M |
| Diluted shares, year before | 226.5M shares |
| Diluted shares | 223.2M shares |
| EPS growth | +1.1% |
| Net income growth | -0.4% |
| Diluted shares: change | -1.5% |
| eps from profit | -$0.01 |
| eps from share count | $0.03 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q3 2026 (net income, diluted shares, EPS) · Q3 2025 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued Not triggered confidence medium
Net income of $1.6B is not at a cyclical high against the last eight years (median $1.3B, best $1.6B): the P/E of 17.5× is on a normal year.
The figures and how they are read
| market value | $27.5B |
| net income ttm | $1.6B |
| pe ttm | 17.50 |
| net income median fy | $1.3B |
| pe mid cycle | 21.70 |
| net income peak fy | $1.6B |
| years | FY2018 / 1341.0; FY2019 / 1243.0; FY2020 / 1059.0; FY2021 / 1439.0; FY2022 / 1026.0; FY2023 / 1270.0; FY2024 / 1116.0; FY2025 / 1576.0 |
| down years in window | 4 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q3 2026 (net income, trailing twelve months)
E07 A precise DCF value = the true value Insufficient data
no DCF in the valuation research for this company
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → PPG Industries: cash flow → Earnings quality score →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.