Axalta Coating Systems' Stock Up 11% in 6 Months: What's Driving It?
Axalta Coating Systems Ltd.’s AXTA shares have gained 10.7% in the past six months. AXTA has also outperformed the industry’s decline of 21.3%.
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Let’s look at the factors driving the stock’s price appreciation.
What’s Driving Axalta Coating?
In the second quarter, Axalta Coating Systems delivered strong results, showcasing a 63% year-over-year rise in adjusted earnings. Quarterly sales went up 4.4%, reaching $1.35 billion. Adjusted EBITDA saw a significant increase, climbing to $291 million from $227 million, with an adjusted EBITDA margin of 21.5%, a 400 basis point (bps) improvement from the prior year.
The Performance Coatings segment reported a 4% rise in net sales, while the segment’s adjusted EBITDA surged 23% year over year to $223 million, achieving a margin of 25%. The Mobility Coatings segment also performed well, with 6% growth in net sales and a 47% year-over-year increase in adjusted EBITDA to $68 million, resulting in an adjusted EBITDA margin of 14.8%, up 440 bps from the previous year.
Axalta has raised its full-year 2024 outlook for adjusted EBITDA, adjusted EPS and free cash flow, driven by strong second-quarter performance, improved outlook for the second half and strategic initiatives aimed at boosting profitability.
Recently, Axalta completed the acquisition of The CoverFlexx Group from Transtar Holding Company. This acquisition strengthens Axalta's Refinish business by integrating CoverFlexx's comprehensive range of automotive refinish and aftermarket coatings, including primers, basecoats, clearcoats and various detailing products. The CoverFlexx Group, which generated $78 million in revenues in 2023, employs more than 120 people and operates facilities in Michigan and Ontario.
Axalta exceeded expectations in the second quarter, reporting adjusted earnings of 57 cents per share, surpassing the Zacks Consensus Estimate of 51 cents. The company beat the consensus estimate in three of the last four quarters while delivering in-line results on the other occasion, with an average trailing four-quarter earnings surprise of approximately 12.6%.
The Zacks Consensus Estimate for Axalta's 2024 earnings is pegged at $2.05, representing year-over-year growth of 30.6%. In the past 60 days, the consensus estimate for the current year has been revised upward by 3%, highlightinganalysts’ optimism. Earnings are expected to increase 13.3% in the third quarter of 2024.
Axalta Coating Systems Ltd. Price and Consensus
Axalta Coating Systems Ltd. price-consensus-chart | Axalta Coating Systems Ltd. Quote
Zacks Rank & Stocks to Consider
Axalta currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are Newmont Corporation NEM, Carpenter Technology Corporation CRS and Eldorado Gold Corporation EGO, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $2.82 per share, indicating a rise of 75% from the year-ago level. The consensus mark for NEM’s earnings has increased 14% in the past 60 days.The stock has gained nearly 34.6% in the past year.
The Zacks Consensus Estimate for CRS’ current-year earnings is pegged at $6.06 per share, indicating a rise of 27.9% from the year-ago level. CRS’ earnings beat the consensus estimate in each of the last four quarters, the average earnings surprise being 15.9%. The stock has rallied nearly 116% in the past year.
The Zacks Consensus Estimate for Eldorado Gold’s current year earnings is pegged at $1.35 per share, indicating a year-over-year rise of 136.8%. EGO beat the consensus estimate in each of the last four quarters, with the average surprise being 430.3%. The company's shares have surged nearly 70.8% in the past year.
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