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Axalta Coating Systems (AXTA)
NYSE:AXTA
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Axalta Coating Systems
(NYSE:AXTA)78Outperform
Positive Factors
Earnings Guidance
With 1Q25E and full-year 2025 EPS guidance coming in ahead of expectations, a positive reaction in the shares is expected.
Financial Performance
AXTA posted a 4Q24 EPS beat on strong price/mix and a $27MM tax benefit, offsetting 1% lower volumes.
Negative Factors
Geopolitical and Economic Risks
Negatives include geopolitical volatility, industrial production/consumer sentiment, and a ~$10MM direct tariff impact.
Axalta Coating Systems (AXTA) vs. S&P 500 (SPY)
Market Cap
$7.73B
Dividend YieldN/A
Average Volume (3M)2.19M
Price to Earnings (P/E)19.7
Beta (1Y)1.22
Revenue Growth1.77%
EPS Growth47.48%
CountryUS
Employees12,800
SectorBasic Materials
Sector Strength56
IndustryChemicals
Share Statistics
EPS (TTM)1.78
Shares Outstanding218,143,310
10 Day Avg. Volume2,055,352
30 Day Avg. Volume2,185,282
Financial Highlights & Ratios
PEG Ratio0.41
Price to Book (P/B)N/A
Price to Sales (P/S)1.46
Price to Cash Flow (P/CF)8.30
P/FCF Ratio6.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$43.58Price Target Upside24.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Axalta Coating Systems Business Overview & Revenue Model
Company DescriptionAxalta Coating Systems (AXTA) is a leading global supplier of liquid and powder coatings. The company primarily serves the automotive, transportation, and construction industries, offering a wide range of high-performance coatings designed to enhance durability, performance, and aesthetics. With a strong focus on innovation and sustainability, Axalta provides solutions that meet the exacting standards of its diverse clientele worldwide.
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 has demonstrated strong financial health with substantial revenue growth, improved profitability, and effective cash flow management. The low debt levels enhance stability, though potential risks include maintaining margin levels amidst fluctuating asset values.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.85
Very Positive
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
Positive
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.80
Positive
| 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
34.93
Price Trends
35.89
Negative
37.09
Negative
36.13
Negative
Market Momentum
-0.42
Positive
41.26
Neutral
39.41
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 34.93 is below the 20-day moving average (MA) of 36.41, below the 50-day MA of 35.89, and below the 200-day MA of 36.13, indicating a bearish trend. The MACD of -0.42 indicates Positive momentum. The RSI at 41.26 is Neutral, neither overbought nor oversold. The STOCH value of 39.41 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 (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $7.73B | 19.66 | 21.49% | ― | 1.77% | 47.48% | |
77 Outperform | $15.99B | 24.57 | 25.61% | 1.56% | 0.12% | 24.30% | |
71 Outperform | $90.51B | 34.12 | 69.05% | 0.79% | 0.20% | 14.31% | |
65 Neutral | $26.18B | 19.34 | 19.13% | 2.33% | -4.59% | 11.09% | |
62 Neutral | $2.47B | 7.28 | 17.67% | ― | 32.42% | -56.26% | |
60 Neutral | $3.10B | 24.84 | 7.27% | 1.56% | 1.65% | -10.99% | |
47 Neutral | $2.64B | -4.00 | -31.55% | 3.33% | 2.93% | -29.90% |
* Basic Materials Sector Average
Performance Comparison
AXTA
Axalta Coating Systems
34.93
1.64
4.93%
FUL
H.B. Fuller Company
57.05
-21.28
-27.17%
PPG
PPG Industries
115.48
-23.95
-17.18%
RPM
RPM International
122.55
6.86
5.93%
SHW
Sherwin-Williams Company
363.62
26.04
7.71%
VAL
Valaris
37.39
-31.98
-46.10%
Axalta Coating Systems Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -0.51% | Next Earnings Date: Apr 28, 2025
Earnings Call Sentiment Positive
Axalta's earnings call showcased strong performance with record-breaking financial metrics, improved margins, and strategic growth initiatives, despite facing foreign currency headwinds, challenges in the Refinish market, and new tariff concerns.Highlights
Record-Breaking Sales and Earnings
Axalta reported the highest net sales and adjusted EBITDA in its history for fiscal year 2024, with a record fourth-quarter net sales of $1.3 billion and adjusted EBITDA of $275 million, marking the 10th consecutive quarter of year-over-year adjusted EBITDA growth.
Improved Financial Metrics
Adjusted EBITDA margins improved by 170 basis points versus the prior year to 21%, achieving the margin objective set for 2026 ahead of schedule. Adjusted diluted EPS grew by 30% year-over-year to $0.60 in the fourth quarter.
Strong Balance Sheet
Axalta's balance sheet continued to improve, with the total net leverage ratio declining for the eighth consecutive quarter to 2.5x, reaching the high end of their A plan target range.
Successful Transformation Initiatives
Axalta achieved approximately $20 million in transformation savings in 2024, exceeding their plan and aiming for $75 million in total savings. Variable costs were reduced by 7%, and delivery times improved by 10%.
Strategic Growth Initiatives
Secured approximately 2,800 net new body shop wins in Refinish and completed the acquisition of the CoverFlexx Group, contributing to a 5% growth in light vehicle net sales despite a decline in global auto builds.
Partnership for Digital Paint Solutions
Announced a strategic partnership with Dürr for automotive digital paint solutions, enhancing Axalta's offerings with Dürr's robotics experience.
Lowlights
Foreign Currency Headwinds
The company faced meaningful foreign currency headwinds in the fourth quarter, not anticipated in prior guidance, which impacted net sales by approximately $80 million to $100 million year-over-year.
Refinish Market Challenges
Industry conditions in the Refinish market were challenging, with expected industry volumes to be flat to down low single digits in North America and EMEA for 2025.
Industrial Coatings Volume Decline
Industrial net sales declined 5% year-over-year due to volume declines driven by demand weakness in North America.
Tariff Concerns
New tariffs put in place by the U.S. government on Canada, Mexico, and China could create a challenging global trade environment, with an anticipated adjusted EBITDA impact of $10 million.
Company Guidance
During Axalta's Q4 2024 earnings call, the company reported record-breaking results, achieving the highest net sales and adjusted EBITDA in its history. The fourth quarter net sales reached $1.3 billion, with a 10% year-over-year increase in adjusted EBITDA to $275 million. This growth was driven by contributions from the CoverFlexx acquisition and net new body shop wins, despite facing challenges like foreign currency headwinds. Axalta improved its adjusted EBITDA margins by 170 basis points to 21%, reaching its 2026 A plan margin objective ahead of schedule. Adjusted diluted EPS rose by 30% year-over-year to $0.60. Additionally, the company continued to strengthen its balance sheet, reducing the net leverage ratio for the eighth consecutive quarter to a company record of 2.5x. Looking ahead to 2025, Axalta anticipates net sales growth in the low single digits and adjusted diluted EPS between $2.50 and $2.60, reflecting a 9% increase at the midpoint.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.