AXALTA COATING SYSTEMS LTD (NYSE:AXTA) – An Undervalued Stock Worth Considering

AXALTA COATING SYSTEMS LTD (NYSE:AXTA) was identified by our Decent Value stock screener as a potential opportunity for value investors. The company, a leading manufacturer of coatings systems, shows a combination of reasonable valuation, solid profitability, and stable financial health. Below, we examine why AXTA stands out based on its fundamental metrics.

Valuation

AXTA’s valuation metrics suggest the stock is priced attractively compared to industry peers and the broader market:

• P/E Ratio: At 13.17, AXTA trades below the industry average (26.65) and the S&P 500 average (27.41).
• Forward P/E: The forward P/E of 10.91 indicates further upside potential, with 72.94% of industry peers trading at higher multiples.
• Price/Free Cash Flow: The ratio of 8.56 is favorable, placing AXTA cheaper than 76.47% of competitors.

These figures suggest the stock may be undervalued, particularly given its profitability and growth prospects.

Profitability

AXTA scores well on profitability, with key strengths including:

• Return on Equity (ROE): At 21.63%, AXTA outperforms 90.59% of its industry peers.
• Operating Margin: A healthy 15.73% margin, better than 78.82% of competitors.
• Profit Margin: At 8.56%, the company ranks above 81.18% of the sector.

These metrics indicate efficient operations and strong earnings generation.

Financial Health

While AXTA has some debt exposure, its financial health remains stable:

• Current Ratio: A solid 2.12 suggests no short-term liquidity concerns.
• Quick Ratio: At 1.53, the company maintains sufficient liquid assets.
• Debt Management: The Debt/Equity ratio of 1.64 is high but still better than 20% of industry peers.

Though leverage is a consideration, AXTA’s cash flow and solvency metrics provide reassurance.

Growth

AXTA’s growth outlook is moderate but stable:

• Recent EPS Growth: Earnings per share grew 37.43% over the past year.
• Future EPS Growth: Analysts expect annual EPS growth of 10.63% in coming years.
• Revenue Growth: While past revenue growth has been modest (3.31% annually), the company maintains steady demand in its coatings business.

For investors seeking a reasonably priced stock with solid fundamentals, AXTA presents a compelling case.

Our Decent Value screener lists more stocks with similar characteristics and is updated daily.
For a deeper dive, review the full fundamental report on AXTA.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.