Axalta Coating (AXTA) Shares Up 29% in 3 Months: Here's Why
Axalta Coating Systems Ltd.’s AXTA shares have gained 29.2% in the last three months. The stock has also outperformed the industry’s rise of 14.6% over the same time frame. The company has topped the S&P 500’s nearly 10.9% 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?
In the third quarter, Axalta Coating demonstrated strong financial performance, reporting a 15.4% year-over-year increase in earnings and a 5.7% year-over-year growth in sales, reaching $1.3 billion. Income from operations saw a rise of 32% year over year to $163 million, accompanied by a 250-basis points (bps) improvement in the operating margin to 12.5%. Adjusted EBIT also showed positive momentum, rising to $188 million from $148 million, with an adjusted EBIT margin of 14.3%, up by 240 bps compared with 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, albeit partially offset by lower volumes. The segment's adjusted EBIT rose to $135 million, with a margin of 15.8%. Mobility Coatings experienced significant growth with a 13% increase 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 Coating witnessed a notable increase in cash provided by operating activities, reaching $210 million in the third quarter compared with $80 million in the year-ago period. Free cash flow in the quarter also experienced significant growth, totaling $182 million, as opposed to $51 million in the comparable quarter 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, with a total consideration of $50 million. Following the quarter's close, Axalta strategically expanded its portfolio by acquiring Andre Koch AG, a well-established Refinish distribution partner headquartered in Switzerland. In response to these positive developments, Axalta raised its full-year 2023 earnings outlook.
For 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, delivering an average surprise of 6.7% during this timeframe.
The Zacks Consensus Estimate for AXTA's 2023 earnings is pegged at $1.58, indicating a year-over-year growth of 6.7%. In the past 60 days, the consensus estimate for the current year has seen an upward revision of 8.2%, 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 Centrus Energy Corp. LEU, sporting a Zacks Rank #1 (Strong Buy), and Hawkins, Inc HWKN and Linde plc LIN, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LEU’s current-year earnings has been revised upward by 30.5% in the past 60 days. LEU beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 47.7%. The company’s shares have increased 67.8% in the past year.
The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised upward by 1.8% in the past 60 days. HWKN beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 27.5%, on average. The stock has rallied around 83.8% in a year.
The consensus estimate for Linde’s current fiscal year earnings is pegged at $14.11, indicating a year-over-year surge of 14.8%. AGI beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 5.7%. The company’s shares have surged 25.6% in the past year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Linde PLC (LIN) : Free Stock Analysis Report
Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
Hawkins, Inc. (HWKN) : Free Stock Analysis Report
Centrus Energy Corp. (LEU) : Free Stock Analysis Report
