Axalta Coating Systems (NYSE:AXTA) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Axalta Coating Systems Ltd. (NYSE:AXTA) is scheduled to report Q3 earnings results on October 22, 2020.

The company is expected to report earnings of $0.33/share on revenue of $959.5 million. The consensus earnings per share (EPS) of $0.33/share is based on a poll of 16 analysts and represents a decline in eps of −35.6% over the same quarter last year, when the company reported earnings of $0.52/share.

The revenue forecast of $959.5 million based on a poll of 12 analysts implies a year-over-year (YoY) decline in revenue of −13.3%. Last year the company reported $1.107 billion in revenue for the quarter.

Expected to report EPS contraction of −35.6% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $959.47 $1,107.00 −13.3%
EPS $0.33 $0.52 −35.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Axalta Coating Systems Ltd. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.11 -$0.15 -33.2% Missed
Q1, 2020 $0.29 $0.31 5.6% Beat
Q4, 2019 $0.43 $0.42 −3.3% Missed
Q3, 2019 $0.44 $0.52 17.2% Beat
Q2, 2019 $0.43 $0.52 20.7% Beat
Q1, 2019 $0.22 $0.34 56.9% Beat
Q4, 2018 $0.32 $0.34 5.5% Beat
Q3, 2018 $0.29 $0.32 8.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −3.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $23.01 $22.22 −3.4% Decline
May 5, 2020 $19.13 $18.45 −3.6% Decline
January 30, 2020 $28.11 $28.81 2.5% Increase
October 24, 2019 $28.53 $29.39 3.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.14, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.14 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Axalta Coating Systems Ltd. is currently trading at $25.17/share, down −1.8% for the day. The company is trading at approximately 80.5% of its 52-week high of $31.26/share. The company’s stock price is up 13.3% since the last earnings report and up 0.9% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 58.02 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:AXTA Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 77.34 and a forward P/E multiple of 29.96.

Axalta Coating Systems Ltd.’s current share price also implies a price-to-book (P/B) multiple of 4.88. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $25.17
P/E Ratio 77.3x
P/E Ratio (Fwd) 30.0x
PEG Ratio −1.3
Total Debt / Total Capital 40.1%
Levered Free Cash Flow $394.1 million
EV / EBITDA 13.7x

Finbox

Axalta Coating Systems Ltd. is a mid-cap stock with a market capitalization of $5.924 billion and a total enterprise value of $8.943 billion. The company operates in the Materials sector and the Chemicals industry.

Axalta 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 used to refinish 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 claddings and fittings, automotive components, general industrial and HVAC products, job coaters, electrical insulation coatings, appliances, aluminum extrusions, rebars, and oil and gas pipelines; and wood coatings under the Voltatex, AquaEC, Durapon, Hydropon, UNRIVALED, Tufcote and Ceranamel for liquid coatings; and Alesta, Nap-Gard, Abcite, and Plascoat brands for powder. In addition, the company develops and supplies a line of coatings products, such as electrocoat, primer, basecoat, and clearcoat products for OEMs of light and commercial vehicles; and various coatings systems for various commercial applications, including HDT, bus, and rail under the Imron, Imron Elite, Centari, Rival, Corlar epoxy undercoats, and AquaEC brands; and sells and ships its products to light vehicle OEM customers. It sells its product under the Audurra, Challenger, Chemophan, ColorNet, Corlar, Cromax, Cromax Mosaic, Durapon 70, Duxone, Harmonized Coating Technologies, Imron ExcelPro, Lutophen, Nason, Spies Hecker, Standox, Stollaquid, Syntopal, Syrox, 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.

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