Downgrading 7→6. DCF FV $92 vs current $103: trading 12% above intrinsic value. Mean reversion from extreme oversold (RSI 25) to RSI 40 largely complete. RF model=34.8% — only portfolio name where model disagrees. Risk-Off regime + above fair value + no near-term catalyst before April 28 earnings. Trimming 50% at open. April 28 earnings remains upside optionality for remaining half.
Position flat at .22 vs .75 entry. RSI was 25.1 extreme oversold on entry — bounce thesis playing out slowly. Both DCF (28.4%) and RF (34.8%) models tepid — real risk this is value trap not reversion. Industrial coatings oligopoly thesis intact. Must see beat+raise April 28 or drop to conv 6. Stop .65.
Lowering 7→6. Oil-priced resins/chemicals = direct cost headwind. Below 200dma with no catalyst to recover until energy shock resolves. Aerospace bright spot not enough to offset. Trim candidate if Iran war persists past April.
Fair Value Distribution — percentile bands
39.9% of simulations place fair value above current price
WHAT IS PRICED IN
Revenue-Based Reverse DCF
3.4%/yr
±3.9% · revenue growth to justify current price
FCF-Based Reverse DCF
12.6%/yr
±3.2% · FCF growth to justify current price
THE GAP
Market pricing margin compression or rising capex
KEY VALUE DRIVERS
Spearman correlation — what moves this valuation most
Deeply oversold at RSI 27, near lower Bollinger band — a mean-reversion bounce is likely before a longer recovery. Housing starts will eventually recover as Fed eventually pivots; PPG is a levered play on that cycle.
Oil shock → rising petrochemical input costs eat margins while stagflation kills housing/construction demand. Revenue already under pressure in automotive OEM coatings globally. Entry target $95 not yet reached ($104).
Sustained $100+ oil, US housing starts fall below 1M, major customer concentration loss
Updated Mar 12
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