Critical Survey: PPG Industries (NYSE:PPG) vs. Trinseo (NYSE:TSE)

PPG Industries (NYSE:PPG) and Trinseo (NYSE:TSE) are both materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, dividends, risk, earnings and valuation.

Analyst Ratings

This is a summary of recent recommendations and price targets for PPG Industries and Trinseo, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PPG Industries	0	9	9	0	2.50
Trinseo	1	2	0	0	1.67

PPG Industries presently has a consensus target price of $128.29, suggesting a potential upside of 7.16%. Trinseo has a consensus target price of $1.00, suggesting a potential upside of 334.78%. Given Trinseo’s higher possible upside, analysts clearly believe Trinseo is more favorable than PPG Industries.

Earnings & Valuation

This table compares PPG Industries and Trinseo”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PPG Industries	$15.88 billion	1.67	$1.58 billion	$7.00	17.10
Trinseo	$3.13 billion	0.00	-$348.50 million	($11.55)	-0.02

PPG Industries has higher revenue and earnings than Trinseo. Trinseo is trading at a lower price-to-earnings ratio than PPG Industries, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

PPG Industries has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500. Comparatively, Trinseo has a beta of 1.46, suggesting that its share price is 46% more volatile than the S&P 500.

Profitability

This table compares PPG Industries and Trinseo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PPG Industries	9.41%	20.90%	7.85%
Trinseo	-13.15%	N/A	-11.72%

Institutional & Insider Ownership

81.9% of PPG Industries shares are owned by institutional investors. Comparatively, 82.7% of Trinseo shares are owned by institutional investors. 0.3% of PPG Industries shares are owned by insiders. Comparatively, 4.5% of Trinseo shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

PPG Industries pays an annual dividend of $2.96 per share and has a dividend yield of 2.5%. Trinseo pays an annual dividend of $0.04 per share and has a dividend yield of 17.4%. PPG Industries pays out 42.3% of its earnings in the form of a dividend. Trinseo pays out -0.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. PPG Industries has increased its dividend for 54 consecutive years and Trinseo has increased its dividend for 1 consecutive years. Trinseo is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

PPG Industries beats Trinseo on 11 of the 17 factors compared between the two stocks.

About PPG Industries

PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials in the United States, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa. It operates through two segments, Performance Coatings and Industrial Coatings. The Performance Coatings segment offers coatings, solvents, adhesives, sealants, sundries, and software for automotive and commercial transport/fleet repair and refurbishing, light industrial coatings, and specialty coatings for signs; wood stains; paints, thermoplastics, pavement marking products, and other advanced technologies for pavement marking for government, commercial infrastructure, painting, and maintenance contractors; and coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft. The Industrial Coatings segment offers coatings, adhesives and sealants, and metal pretreatments, as well as services and coatings applications for appliances, agricultural and construction equipment, consumer electronics, automotive parts and accessories, building products, kitchenware, and transportation vehicles and other finished products; and on-site coatings services. It also provides coatings for metal cans, closures, plastic and aluminum tubes for food, beverage and personal care, promotional, and specialty packaging; amorphous precipitated silica for tire, battery separator, and other end-uses; TESLIN substrates for labels, e-passports, drivers' licenses, breathable membranes, and loyalty and identification cards; and organic light emitting diode materials, displays and lighting lens materials, optical lenses, color-change products, and photochromic dyes. PPG Industries, Inc. was incorporated in 1883 and is headquartered in Pittsburgh, Pennsylvania.

About Trinseo

Trinseo PLC operates as a specialty material solutions provider in the United States, Europe, the Asia-Pacific, and internationally. It operates through five segments: Engineered Materials, Latex Binders, Plastics Solutions, Polystyrene, and Americas Styrenics. The Engineered Materials segment offers rigid thermoplastic compounds and blends, soft thermoplastic, continuous cast, cell cast, activated methyl methacrylates (MMA), PMMA resins, and extruded PMMA sheets and resins for consumer electronics, medical, footwear, automotive, and building and construction applications under the EMERGE, CALIBRE, PLEXIGLAS, ALTUGLAS, ACRYSPA, AVONITE, STUDIO, MEGOL, APILON, APIGO, and APINAT brands. The Latex Binders segment provides styrene-butadiene latex, and other latex polymers and binders primarily for coated paper and packaging board, carpet, and artificial turf backings, as well as the adhesive, building and construction, and technical textile paper market. The Plastics Solutions segment offers acrylonitrile-butadiene-styrene, styrene-acrylonitrile, polycarbonate, and compounds and blends for automotive and other applications under the MAGNUM brand. The Polystyrene segment provides general purpose polystyrenes and high impact polystyrene for use in appliances, food packaging and food service disposables, consumer electronics, and building and construction materials under the STYRON brand. The Americas Styrenics segment provides styrene and polystyrene for appliances, food packaging, food service disposables, consumer electronics, and building and construction materials applications. Trinseo PLC was incorporated in 2015 and is headquartered in Wayne, Pennsylvania.