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Axalta Coating (AXTA) Shares Up 9% in 3 Months: Here's Why
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Axalta Coating Systems Ltd.’s (AXTA - Free Report) shares have gained 8.6% in the last three months. Owing to the upside, the stock outperformed the industry’s rise of 3.3% over the same time frame. The company has topped the S&P 500’s roughly 0.6% rise over the same period.
Image Source: Zacks Investment Research
Let’s look at the factors driving this Zacks Rank #1 (Strong Buy) stock.
What’s Going in Axalta’s Favor?
Axalta delivered a robust performance in the third quarter, posting a 15.4% year-over-year increase in earnings and 5.7% year-over-year growth in sales — reaching $1.3 billion. Income from operations jumped 32% year over year to $163 million, with the operating margin improving 250 basis points (bps) to 12.5%. Adjusted EBIT also showed improvement, rising to $188 million from $148 million, with an adjusted EBIT margin of 14.3%, up by 240 bps from the previous year’s levels.
The Performance Coatings segment reported a 2.2% increase in net sales, driven by an improved price mix and a positive impact from foreign currency translation, partially offset by lower volumes. The segment's Adjusted EBIT rose to $135 million, with a margin of 15.8%. Mobility Coatings experienced a significant 13% growth in net sales, propelled by price-mix growth and volume improvement, especially in Greater China. The segment's Adjusted EBIT surged to $40 million, marking the seventh consecutive quarter of sequential earnings improvement.
Axalta saw a substantial increase in cash provided by operating activities, reaching $210 million compared with $80 million in the corresponding period of the prior year. Free cash flow in the quarter also experienced significant growth, totaling $182 million, as opposed to $51 million in the same period last year.
During the third quarter, Axalta executed a share repurchase program, buying back approximately 1.8 million common shares at an average price of $27.79 per share. The total consideration for these repurchases amounted to $50 million. Following the close of the quarter, Axalta strategically expanded its portfolio by acquiring Andre Koch AG, a well-established Refinish distribution partner headquartered in Switzerland. In light of these positive developments, Axalta raised its full-year 2023 earnings outlook.
During the third quarter, Axalta Coating reported adjusted earnings of 45 cents per share, surpassing the Zacks Consensus Estimate of 38 cents. The company has outperformed earnings estimates in three of the last four quarters. In this timeframe, it has delivered an average surprise of 6.7%.
The Zacks Consensus Estimate for AXTA's 2023 earnings is pegged at $1.58, indicating year-over-year growth of 6.7%. The consensus estimate for the current year has seen an upward revision of 8.2% in the past 60 days, highlighting a positive outlook for healthy growth potential.
The consensus estimate for USAP’s current year earnings is pegged at 52 cents, indicating year-over-year growth of 170.3%. USAP beat the Zacks Consensus Estimate in three of the last four quarters and missed one, with the average earnings surprise being 44.4%. The company’s shares have rallied 135.5% in the past year.
The Zacks Consensus Estimate for ANDE’s current-year earnings has been revised upward by 5.1% in the past 60 days. Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.8% on average. ANDE’s shares have rallied around 29.2% in a year.
The consensus estimate for Alamos’ current fiscal year earnings is pegged at 53 cents, indicating a year-over-year rise of 89.3%. AGI beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have increased 50.2% in the past year.
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Axalta Coating (AXTA) Shares Up 9% in 3 Months: Here's Why
Axalta Coating Systems Ltd.’s (AXTA - Free Report) shares have gained 8.6% in the last three months. Owing to the upside, the stock outperformed the industry’s rise of 3.3% over the same time frame. The company has topped the S&P 500’s roughly 0.6% rise over the same period.
Image Source: Zacks Investment Research
Let’s look at the factors driving this Zacks Rank #1 (Strong Buy) stock.
What’s Going in Axalta’s Favor?
Axalta delivered a robust performance in the third quarter, posting a 15.4% year-over-year increase in earnings and 5.7% year-over-year growth in sales — reaching $1.3 billion. Income from operations jumped 32% year over year to $163 million, with the operating margin improving 250 basis points (bps) to 12.5%. Adjusted EBIT also showed improvement, rising to $188 million from $148 million, with an adjusted EBIT margin of 14.3%, up by 240 bps from the previous year’s levels.
The Performance Coatings segment reported a 2.2% increase in net sales, driven by an improved price mix and a positive impact from foreign currency translation, partially offset by lower volumes. The segment's Adjusted EBIT rose to $135 million, with a margin of 15.8%. Mobility Coatings experienced a significant 13% growth in net sales, propelled by price-mix growth and volume improvement, especially in Greater China. The segment's Adjusted EBIT surged to $40 million, marking the seventh consecutive quarter of sequential earnings improvement.
Axalta saw a substantial increase in cash provided by operating activities, reaching $210 million compared with $80 million in the corresponding period of the prior year. Free cash flow in the quarter also experienced significant growth, totaling $182 million, as opposed to $51 million in the same period last year.
During the third quarter, Axalta executed a share repurchase program, buying back approximately 1.8 million common shares at an average price of $27.79 per share. The total consideration for these repurchases amounted to $50 million. Following the close of the quarter, Axalta strategically expanded its portfolio by acquiring Andre Koch AG, a well-established Refinish distribution partner headquartered in Switzerland. In light of these positive developments, Axalta raised its full-year 2023 earnings outlook.
During the third quarter, Axalta Coating reported adjusted earnings of 45 cents per share, surpassing the Zacks Consensus Estimate of 38 cents. The company has outperformed earnings estimates in three of the last four quarters. In this timeframe, it has delivered an average surprise of 6.7%.
The Zacks Consensus Estimate for AXTA's 2023 earnings is pegged at $1.58, indicating year-over-year growth of 6.7%. The consensus estimate for the current year has seen an upward revision of 8.2% in the past 60 days, highlighting a positive outlook for healthy growth potential.
Axalta Coating Systems Ltd. Price and Consensus
Axalta Coating Systems Ltd. price-consensus-chart | Axalta Coating Systems Ltd. Quote
Zacks Rank & Other Key Picks
Some other top-ranked stocks in the Basic Materials space are Universal Stainless & Alloy Products, Inc. , The Andersons Inc. (ANDE - Free Report) and Alamos Gold Inc. (AGI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for USAP’s current year earnings is pegged at 52 cents, indicating year-over-year growth of 170.3%. USAP beat the Zacks Consensus Estimate in three of the last four quarters and missed one, with the average earnings surprise being 44.4%. The company’s shares have rallied 135.5% in the past year.
The Zacks Consensus Estimate for ANDE’s current-year earnings has been revised upward by 5.1% in the past 60 days. Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.8% on average. ANDE’s shares have rallied around 29.2% in a year.
The consensus estimate for Alamos’ current fiscal year earnings is pegged at 53 cents, indicating a year-over-year rise of 89.3%. AGI beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have increased 50.2% in the past year.