Using an unlevered Free Cash Flow to Firm (FCFF) model, we project PPG Industries, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 3.4% to -1.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 72, DPO 130, DIO 76). At a 7.6% WACC with mid-year discounting, the terminal value (89% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 26.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $280.59 per share, suggesting PPG is undervalued by 166.4% at the current price of $105.34.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,227 | 2,289 | 2,363 | 2,367 | 2,333 | 2,392 |
| (−) Net Interest | 209 | 214 | 221 | 222 | 219 | 224 |
| (+) D&A | 574 | 618 | 642 | 664 | 645 | 661 |
| EBITDA | 3,009 | 3,121 | 3,226 | 3,252 | 3,197 | 3,277 |
| (−) Tax | 524 | 538 | 556 | 557 | 549 | — |
| (−) CapEx | 589 | 606 | 625 | 626 | 618 | — |
| (−) ΔWC | 382 | 49 | 58 | 3 | -26 | — |
| Free Cash Flow (FCF) | 1,515 | 1,928 | 1,987 | 2,066 | 2,057 | — |
| Peers' EBITDA Multiple | 26.9x | |||||
| Terminal Value | 88,277 | |||||
| WACC / Discount Rate | 7.64% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,460 | 1,726 | 1,653 | 1,596 | 1,477 | 61,084 |
| Enterprise Value | 68,996 | |||||
| Projection Period | 7,912 | 11.5% | ||||
| Terminal Value | 61,084 | 88.5% | ||||
| (−) Current Net Debt | 5,283 | |||||
| Equity Value | 63,713 | |||||
| (÷) Outstanding Shares | 227M | |||||
| Fair Price | $281 | +166.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 22.9x | 24.9x | 26.9x | 28.9x | 30.9x |
|---|---|---|---|---|---|
| 5.6% | $265 | $287 | $309 | $331 | $353 |
| 6.6% | $252 | $273 | $294 | $315 | $336 |
| 7.6% | $241 | $261 | $281 | $301 | $321 |
| 8.6% | $230 | $249 | $268 | $287 | $306 |
| 9.6% | $219 | $237 | $255 | $274 | $292 |
Current price: $105.34. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.