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Axalta Coating Systems (AXTA)
NYSE:AXTA
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Axalta Coating Systems
(NYSE:AXTA)
76Outperform
Positive Factors
Cost Management
Axalta is cutting costs, leading to a good earnings performance with both costs of goods sold, SG&A, and R&D values falling.
Earnings Performance
1Q results came in modestly ahead of prior estimates, indicating some positive performance despite challenges.
Market Positioning
AXTA's larger profit generating Performance segment (Industrial + Refinish) has been more stable through cycles both in terms of volumes and consistent positive pricing.
Negative Factors
Demand Forecast
Incrementally negative commentary surrounding Refinish demand, with the industry now expected to decline more than previously anticipated, impacts the stock negatively.
Financial Outlook
A more cautious view on 2025 is taken, reducing EBITDA by ~2%, which is ~2% below consensus.
Valuation
The updated price target for Axalta reflects lower peer multiples, suggesting a less favorable valuation environment.
Axalta Coating Systems (AXTA) vs. S&P 500 (SPY)
Market Cap
$7.27B
Dividend YieldN/A
Average Volume (3M)2.36M
Price to Earnings (P/E)18.7
Beta (1Y)1.09
Revenue Growth0.96%
EPS Growth82.78%
CountryUS
Employees12,800
SectorBasic Materials
Sector Strength60
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)0.59
Shares Outstanding218,560,710
10 Day Avg. Volume2,284,778
30 Day Avg. Volume2,362,646
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.44
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit5.83
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$39.60Price Target Upside26.64% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Axalta Coating Systems Business Overview & Revenue Model
Company DescriptionAxalta Coating Systems Ltd., through its subsidiaries, manufactures, markets, and distributes high-performance coatings systems in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. It operates through two segments, Performance Coatings and Transportation Coatings. The company offers water and solvent-borne products and systems to repair damaged vehicles for independent body shops, multi-shop operators, and original equipment manufacturer (OEM) dealership body shops. It also provides functional and decorative liquid, and powder coatings used in various industrial applications, including architectural cladding and fittings, automotive coatings, general industrial, job coaters, energy solutions, HVAC, appliances, industrial wood, coil, and oil and gas pipelines; and coatings for building materials, cabinet, wood and luxury vinyl flooring, and furniture market under the Voltatex, AquaEC, Durapon, Hydropon, UNRIVALED, Tufcote, and Ceranamel for liquid coatings; and Alesta, Nap-Gard, Abcite, Teodur, and Plascoat brands for powder coatings. In addition, the company develops and supplies electrocoat, primer, the basecoat, and clearcoat products for OEMs of light and commercial vehicles; and coatings systems for various commercial applications, including HDT, bus, and rail under the Imron, Imron Elite, Centari, Rival, Corlar epoxy undercoats, and AquaEC brands. It also sells its product under the Audurra, Challenger, Chemophan, ColorNet, Cromax, Cromax Mosaic, Durapon 70, Duxone, Harmonized Coating Technologies, Imron ExcelPro, Lutophen, Nason, Spies Hecker, Standox, Stollaquid, Syntopal, Syrox, Raptor, U-POL, and Vermeera brand names. The company was formerly known as Axalta Coating Systems Bermuda Co., Ltd. and changed its name to Axalta Coating Systems Ltd. in August 2014. Axalta Coating Systems Ltd. was founded in 1866 and is headquartered in Philadelphia, Pennsylvania.
How the Company Makes MoneyAxalta Coating Systems generates revenue through the sale of its various coating products across two main segments: Performance Coatings and Transportation Coatings. The Performance Coatings segment caters to customers in the industrial, commercial, and refinish markets, providing coatings for vehicles, buildings, and machinery. The Transportation Coatings segment focuses on original equipment manufacturers (OEMs) in the automotive and commercial vehicle sectors, supplying coatings used in the production of new vehicles. Axalta's revenue model is bolstered by strategic partnerships with automotive and industrial companies, enabling it to maintain a steady demand for its products. The company also invests in research and development to innovate new products and improve existing ones, further driving sales and maintaining competitive advantage in its markets.
Axalta Coating Systems Financial Statement Overview
Summary
Axalta Coating Systems exhibits robust financial health with strong revenue growth from $3.74 billion in 2020 to $5.28 billion in TTM 2024. Improved profitability is shown by a significant increase in gross and net profit margins. The balance sheet has strengthened with a low debt-to-equity ratio of 0.01 and a high return on equity of 20.45%. Cash flow is strong, although there was a slight dip in free cash flow in TTM 2024. Overall, the company's financial position is solid, but it must manage margins and leverage.Income Statement
Axalta Coating Systems has demonstrated strong revenue growth over the years with a notable increase from $3.74 billion in 2020 to $5.28 billion in TTM 2024. The gross profit margin has improved significantly, indicating better cost management and pricing strategies. The net profit margin has also increased, reflecting enhanced profitability. However, the margins could face pressure if costs rise or pricing power diminishes.―
Balance Sheet
The company's balance sheet shows a low debt-to-equity ratio of 0.01 in TTM 2024, which is a significant reduction from previous years, enhancing financial stability. Return on equity has improved to 20.45%, indicating effective utilization of equity. The equity ratio is 26.38%, suggesting a reasonable level of leverage. However, the low equity ratio could pose risks if asset values fluctuate.78
Cash Flow
Axalta has shown a strong operating cash flow to net income ratio, indicating efficient cash conversion. The free cash flow has grown, with a slight dip in TTM 2024, but it remains positive, reflecting the company's ability to generate cash after capital expenditures. The free cash flow to net income ratio is healthy, supporting financial flexibility.―
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.28B | 5.18B | 4.88B | 4.42B | 3.74B | Gross Profit |
| 1.80B | 1.62B | 1.42B | 1.43B | 1.28B | EBIT |
| 706.00M | 587.50M | 423.20M | 462.40M | 305.50M | EBITDA |
| 706.00M | 831.00M | 754.50M | 828.60M | 598.30M | Net Income Common Stockholders |
| 391.00M | 267.40M | 191.60M | 263.90M | 121.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 593.00M | 700.20M | 645.20M | 840.60M | 1.36B | Total Assets |
| 7.25B | 7.27B | 7.06B | 7.22B | 7.16B | Total Debt |
| 20.00M | 3.54B | 3.70B | 3.83B | 3.89B | Net Debt |
| -573.00M | 2.84B | 3.06B | 2.99B | 2.53B | Total Liabilities |
| 5.29B | 5.50B | 5.56B | 5.68B | 5.68B | Stockholders Equity |
| 1.91B | 1.73B | 1.45B | 1.49B | 1.43B |
| Cash Flow | Free Cash Flow | |||
| 436.00M | 437.40M | 142.90M | 437.00M | 427.20M | Operating Cash Flow |
| 576.00M | 575.30M | 293.80M | 558.60M | 509.30M | Investing Cash Flow |
| -440.00M | -205.70M | -106.40M | -716.00M | -61.50M | Financing Cash Flow |
| -201.00M | -315.00M | -368.90M | -334.50M | -130.90M |
Axalta Coating Systems Technical Analysis
Negative
31.27
Price Trends
32.87
Negative
34.46
Negative
35.58
Negative
Market Momentum
-0.09
Negative
43.31
Neutral
33.85
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AXTA, the sentiment is Negative. The current price of 31.27 is below the 20-day moving average (MA) of 31.74, below the 50-day MA of 32.87, and below the 200-day MA of 35.58, indicating a bearish trend. The MACD of -0.09 indicates Negative momentum. The RSI at 43.31 is Neutral, neither overbought nor oversold. The STOCH value of 33.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AXTA.
Axalta Coating Systems Risk Analysis
Axalta Coating Systems disclosed 47 risk factors in its most recent earnings report. Axalta Coating Systems reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Axalta Coating Systems Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $88.34B | 34.05 | 70.22% | 0.83% | 0.26% | 12.82% | |
76 Outperform | $7.27B | 18.73 | 23.59% | ― | 0.96% | 82.78% | |
68 Neutral | $8.79B | 9.71 | 16.16% | 4.36% | 2.78% | 1.50% | |
63 Neutral | $2.88B | 27.03 | 6.35% | 1.70% | 0.99% | -27.62% | |
63 Neutral | $24.64B | 18.67 | 18.47% | 2.52% | -7.67% | -0.58% | |
57 Neutral | $1.81B | 21.13 | 4.66% | 9.17% | -0.68% | ― | |
49 Neutral | $1.94B | -1.23 | -21.28% | 3.73% | 1.19% | -29.73% |
* Basic Materials Sector Average
Performance Comparison
AXTA
Axalta Coating Systems
31.27
-4.94
-13.64%
EMN
Eastman Chemical
77.45
-20.29
-20.76%
FUL
H.B. Fuller Company
54.79
-23.34
-29.87%
PPG
PPG Industries
108.61
-23.49
-17.78%
SHW
Sherwin-Williams Company
353.57
35.77
11.26%
CC
Chemours Company
11.24
-15.74
-58.34%
Axalta Coating Systems Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: -6.01%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
Axalta's Q1 2025 earnings call presented a mixed picture. While the company achieved record financial performance in terms of adjusted EBITDA and EPS and received significant innovation awards, it faced challenges such as flat net sales growth, macroeconomic pressures, and impacts from trade tensions. The Mobility Coatings segment showed strong performance, but the Refinish and Industrial segments experienced sales declines due to unfavorable market conditions.Q1-2025 Updates
Positive Updates
Record Adjusted EBITDA and EPS
Axalta achieved a record for adjusted EBITDA at $270 million, a 4% increase year-over-year, and adjusted diluted EPS grew by 16% to $0.59.
Innovation Recognition
Axalta received two Edison Awards and a Big Innovation Award for its products, Irus Scan and MyColor, marking the seventh consecutive year of receiving an Edison Award.
Operational Efficiency Improvements
Operating expenses decreased by 4% from last year due to savings from transformation initiatives, and EBITDA margin grew by 140 basis points.
Strong Performance in Mobility Coatings
Mobility Coatings segment achieved a 230 basis point margin expansion to 16.5%, driven by strong performance in Light Vehicle and price/cost stability.
Successful New Body Shop Additions
Axalta added approximately 900 net new body shops, outperforming the industry in Refinish.
Negative Updates
Flat Net Sales Growth
Net sales remained flat year-over-year on a constant currency basis due to volume declines, despite positive price-mix contributions.
Macroeconomic Challenges
Three of four end markets showed macro declines, with external demand pressures continuing to affect collision claims and repair activities.
Impact of Trade Tensions
Increased trade tensions and tariffs are expected to cost Axalta approximately $50 million annually, with $25 million impacting 2025.
Industrial Segment Decline
Industrial organic net sales decreased by 4% year-over-year, in line with broader negative trends in industrial production and housing.
Refinish Market Decline
Refinish organic net sales decreased by 1%, with the industry expected to be down low to mid-single digits due to insurance premium inflation and consumer confidence issues.
Company Guidance
During the Axalta Coating Systems Q1 2025 Earnings Call, the company provided guidance that demonstrated resilience amidst challenging market conditions. Axalta reported a record adjusted EBITDA of $270 million, a 4% increase year-over-year, with an adjusted EBITDA margin growing by 140 basis points. Adjusted diluted EPS also grew by 16% to $0.59. Despite a flat net sales performance, the company highlighted strong operational execution, including a significant decrease in operating expenses by 4% due to transformation initiatives, and a 230 basis point margin expansion in their Mobility segment. Axalta remains vigilant in managing trade tensions and tariffs, estimating a $50 million annual impact, with plans to mitigate this through various strategies. For the full year 2025, Axalta projects net sales between $5.3 billion and $5.375 billion, with adjusted EBITDA margins expected to expand to approximately 22%. The company continues to focus on cost reductions and market share expansion, while maintaining a robust balance sheet with a net leverage ratio of 2.5 times.Axalta Coating Systems Corporate Events
Business Operations and StrategyFinancial Disclosures
Axalta Coating Systems Updates Financial Reporting Metrics
Neutral
Jan 21, 2025
Axalta Coating Systems announced changes in the presentation of certain non-GAAP financial metrics, effective from the fourth quarter and full-year 2024 financial results. These adjustments involve ceasing the step-up depreciation and amortization from a past acquisition in the calculation of Adjusted EBIT and Adjusted Net Income, while beginning to adjust for all acquired intangibles’ amortization. The changes aim to align Axalta’s reporting with industry standards and will affect related metrics like ROIC and Adjusted Diluted EPS. Despite these changes, Axalta’s financial targets for its 2026 strategic plan remain unchanged, with an updated 2023 baseline for Adjusted Diluted EPS set at $1.68 per share.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.