AKZOY - Inflation Is A Risk But PPG Industries Has Good Recovery Leverage

• PPG posted mixed fourth quarter results, with better revenue but modest underperformance on margins, and guidance for 2021 was a touch light on a core basis.
• Notwithstanding the margin miss, I believe PPG has made better progress on costs than appreciated, and I think volume growth from a recovery economy will drive multiyear margin improvement.
• Management has gotten more aggressive on M&A, but it remains to be seen how high they'll go to close the deal for Finland's Tikkurila.
• PPG is directly leveraged to a still-healthy U.S. residential housing market, recovering auto markets, and recovering "general industrial" markets, with aerospace improving later.
• PPG isn't a screaming bargain, but it does look undervalued and offers direct leverage to an improving economy in 2021 and 2022.

For further details see: