PPG Earnings: Pricing Power Drives Margin Expansion Despite Tepid Industrial Demand

Narrow-moat PPG reported solid third-quarter results that were largely in line with our expectations. PPG is navigating a challenging operating environment where higher interest rates weigh on architectural paint demand and global industrial production remains soft in most regions. That said, PPG's price increases and strength in smaller markets like automotive original equipment manufacturer, or OEM, and aerospace have helped offset these challenges. Management noted raw material availability and supply chain conditions continued to improve and have moderated to historical levels, which we think should provide some margin relief going into next year. We've increased our fair value estimate to $117 from $115 per share due to time value of money.