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Should Axalta Coating Systems (NYSE:AXTA) Be Disappointed With Their 15% Profit?

Simply Wall St

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. To wit, the Axalta Coating Systems Ltd. (NYSE:AXTA) share price is 15% higher than it was a year ago, much better than the market return of around 8.0% (not including dividends) in the same period. That's a solid performance by our standards! However, the stock hasn't done so well in the longer term, with the stock only up 11% in three years.

See our latest analysis for Axalta Coating Systems

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Axalta Coating Systems was able to grow EPS by 51% in the last twelve months. It's fair to say that the share price gain of 15% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about Axalta Coating Systems as it was before. This could be an opportunity.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

NYSE:AXTA Past and Future Earnings, October 22nd 2019

We know that Axalta Coating Systems has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

A Different Perspective

Pleasingly, Axalta Coating Systems's total shareholder return last year was 15%. So this year's TSR was actually better than the three-year TSR (annualized) of 3.4%. Given the track record of solid returns over varying time frames, it might be worth putting Axalta Coating Systems on your watchlist. If you would like to research Axalta Coating Systems in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

We will like Axalta Coating Systems better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.