Followers | 241 |
Posts | 12151 |
Boards Moderated | 3 |
Alias Born | 04/05/2009 |
Wednesday, May 18, 2016 10:24:19 PM
Shares of the company, a leading manufacturer of auto paints, could rise by at least 25% over the next year.
By David Englander
While It is a relatively new public company, Axalta Coating Systems is no newcomer to car makers and body shops around the world. A producer of paints and coatings for cars and trucks, Axalta holds the No. 1 or 2 positions in most its global markets.
Axalta (ticker: AXTA) is the leader in automotive refinishing, a highly attractive business, which is less cyclical than selling coatings for newly built vehicles. Sales, here, depend on collisions and miles driven, not production rates.
Once a part of DuPont, where it was largely run to generate cash, Axalta was bought by the Carlyle Group three years ago, and was brought public in November 2014. Since then, the game plan, under CEO Charles Shaver, has been to reinvest for growth, and to improve efficiency and productivity.
The strategy has paid off. Out of the gate, the shares have surged 40%, to a recent $28. Yet there’s still plenty of opportunity for investors. By the end of 2017, RBC Capital Markets analyst Arun Viswanathan contends, Ebitda (earnings before interest, taxes, depreciation, and amortization) could run up 19%, as efficiency improvements shine through. Paying down debt, too, should help.
Axalta generates hefty free cash flow. Barriers to entry, particularly in the refinishing business, are steep. Analyst Viswanathan values the stock at a 10 times multiple of enterprise value to Ebitda, or $35 a share, about 25% above its recent level. His best upside case puts the stock at $37 in a year.
Axalta operates 38 plants, and sells to customers both directly and through over 4,000 distributors. Its brands are well-recognized in the auto industry, and include the likes of Standox, Cromax, and Spies Hecker. The Carlyle Group is still Axalta’s top shareholder, with a 29% stake. In time, it will exit, which should expand the shareholder base.
THE REFINISHING MARKET REPRESENTS the largest slice of revenue, at 43%. It’s a high-margin business, accounting for more than 50% of company profits. Axalta supplies paints and color-matching technology to body shops and has 25% of the global market. Another 40% of its sales come from supplying coatings for new cars, SUVs, heavy trucks, trains, and buses. The remaining profits come from selling coatings for various industrial uses, construction, car components, and electrical insulation.
This year, analysts look for earnings of $294 million, or $1.20 a share, on $4 billion in revenue. In 2017, profit is expected to jump 22%, to $1.47 a share, on 3% higher sales. Free cash flow per share could top $2 a share.
U.S. light-vehicle sales have kept up their furious pace, logging a 3.3% increase in April, to an annualized 17.3 million units. Still, some investors worry about the impact on Axalta whenever sales do decline. Those fears are probably overblown. New cars account for only about 11% of the company’s sales in the U.S., and a similar amount in Europe, where sales are expected to remain strong.
More importantly, Axalta’s refinishing business probably would still grow, even if new-car sales slumped. Market consolidation, especially in the U.S., is one driver. Axalta has a dominant share of larger body shops’ business, and should benefit as these players buy mom-and-pop operations.
Cheaper gas, too, is a positive, as it tends to lead to more collisions, a good thing for refinishing work. In the March quarter, refinishing sales rose 5.3%, before currency effects. On the April earnings call, CEO Shaver guided for 4% to 6% annual revenue growth, company-wide, in 2016, before currencies.
Axalta plans to take out $200 million in annual costs over three years, ending in 2017. Net debt is $3 billion, or 3.3 times expected Ebitda. That could fall to about 2.5 times in the next 18 months or so.
Axalta has attracted some notable value investors. Meryl Witmer of Eagle Capital Partners recommended the stock in Barron’s Roundtable in January, when it traded around $25. Berkshire Hathaway, a 9.8% holder, first bought its shares in April 2015 from the Carlyle Group in a private placement for $28.
With the stock still around the same level, investors can buy in at Warren Buffett’s price.
[...]
http://www.barrons.com/articles/painting-a-pretty-picture-at-axalta-1463197491
Pre-publication closing price: $28.02
"Someone said it takes 30 years to be an instant success" - Gabriel Barbier-Mueller, CEO of Harwood International
Recent AXTA News
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/23/2024 08:34:16 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/23/2024 08:31:44 PM
- Axalta Introduces Axalta Nimbus™, an Advanced Cloud-Based Platform for Refinish Customers, to Improve Productivity and Performance • GlobeNewswire Inc. • 09/10/2024 09:00:00 AM
- Axalta Introduces Axalta Irus Scan, a Next-Generation Spectrophotometer, for Refinish Customers • GlobeNewswire Inc. • 09/03/2024 03:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/27/2024 08:29:22 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/16/2024 08:27:55 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 08:19:37 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/01/2024 01:30:34 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/01/2024 10:02:37 AM
- Axalta Releases Second Quarter 2024 Results • GlobeNewswire Inc. • 08/01/2024 10:00:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/30/2024 08:38:02 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/30/2024 08:36:28 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/30/2024 08:34:17 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/30/2024 08:32:50 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/30/2024 08:30:41 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/30/2024 08:28:35 PM
- Axalta Announces Partnership with CESVIMAP and the Move2Green Sustainability Program • GlobeNewswire Inc. • 07/16/2024 12:00:00 PM
- Axalta Appoints Chris Evans Vice President, Global Strategy, and Colleen Lubic Vice President, Investor Relations • GlobeNewswire Inc. • 07/08/2024 08:15:00 PM
- Axalta Schedules Second-Quarter 2024 Earnings Conference Call • GlobeNewswire Inc. • 07/05/2024 06:30:00 PM
- Axalta Completes Acquisition of The CoverFlexx Group • GlobeNewswire Inc. • 07/02/2024 08:05:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 06/11/2024 08:46:50 PM
- Form SD - Specialized disclosure report • Edgar (US Regulatory) • 05/31/2024 02:01:36 PM
- Solera kündigt strategische Partnerschaft mit Axalta an, einem weltweit führenden Anbieter von Flüssig- und Pulverlacken • Business Wire • 05/21/2024 06:12:00 PM
- Solera annonce un partenariat stratégique avec Axalta, un chef de file mondial des revêtements liquides et en poudre • Business Wire • 05/21/2024 05:37:00 PM
- Solera Announces Strategic Partnership with Axalta, a Leading Global Supplier of Liquid and Powder Coatings • Business Wire • 05/21/2024 12:00:00 PM
FEATURED Cannabix Technologies and Omega Laboratories Inc. Advance Marijuana Breathalyzer Technology - Dr. Bruce Goldberger to Present at Society of Forensic Toxicologists Conference • Sep 24, 2024 8:50 AM
FEATURED Integrated Ventures, Inc Announces Strategic Partnership For GLP-1 (Semaglutide) Procurement Through MedWell USA, LLC. • Sep 24, 2024 8:45 AM
Avant Technologies Accelerates Creation of AI-Powered Platform to Revolutionize Patient Care • AVAI • Sep 24, 2024 8:00 AM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM