AXALTA COATING SYSTEMS LTD. (AXTA): what the price requires
At today's price, AXALTA COATING SYSTEMS LTD. (AXTA) is priced for +1.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Source: https://boothcheck.com/report/AXTA
Headline
| Field | Value |
|---|---|
| Ticker | AXTA |
| Company | AXALTA COATING SYSTEMS LTD. |
| Current price | $31.95/sh |
| Composition | Refinish 40% / Industrial 24% / Light Vehicle 28% / Commercial Vehicle 8% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.7% |
| Operating margin today | 14.1% |
| Margin compression implied | -6.4pp |
| Implied growth | 1.0% |
| Multiple paid | 13x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.9pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.50σ |
| cohort percentile (of 76 peers) | 26 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple value, while asset-based lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.53x | 5 | expensive |
| Earnings | 1.20x | 4 | expensive |
| Relative | 0.89x | 3 | justifies |
| Growth | 1.25x | 3 | expensive |
Families that justify the price: Earnings, Relative Families that call it expensive: Asset
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $25.51 | 1.25x | yes | FCF base $0.5B, growth -3% (input: historical growth), terminal g 0.5%, WACC 9.2%, 5yr projection |
| DCF Exit Multiple | Growth | $31.12 | 1.03x | yes | Exit EV/EBITDA: 4.2x / 6.2x / 8.2x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $32.09 | 1.00x | yes | P/E 14x (static sector reference · 2026-04), scenarios: 11.8x / 14.0x / 16.2x (bear / base = reference held flat / bull), EV/EBITDA 8x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $18.59 | 1.72x | yes | BV/sh $11.28, ROE (TTM) 15.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $23.57 | 1.36x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $18.10 | 1.76x | yes | Rev $5.1B, growth -3% (input: historical growth; tapered), Terminal P/S: 1.1x / 1.3x / 1.5x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $29.58 | 1.08x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.64B × (1−13%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $24.13 | 1.32x | yes | BV $11.28 + 5yr PV of (ROE (TTM) 15.2% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $20.83 | 1.53x | yes | √(22.5 × EPS $1.71 × BVPS $11.28) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $40.24 | 0.79x | yes | EBITDA $1.01B × sector EV/EBITDA 8.0x |
| FCF Yield | Earnings | $27.32 | 1.17x | yes | FCF $488.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $25.96 | 1.23x | yes | SBC-adj FCF $0.46B (FCF $0.49B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $1.43 | 22.34x | yes | EPS $1.71 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $8.43 | 3.79x | yes | BV $11.28 × (ROIC 6.9% / WACC 9.2%) |
| P/Sales Sector | Relative | $35.71 | 0.89x | yes | Revenue $5.11B × sector P/S 1.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $18.49 | 1.73x | yes | EPS $1.71 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $2.6b |
| Net debt / NOPAT (after-tax) | 4.24x |
| Net debt / operating income (pre-tax) | 3.67x |
| Interest coverage | 4.2x |
| Share count CAGR (buyback) | -1.2% |
| Burning cash | no |
Bullet Takeaways
At $34.78 Axalta trades roughly in line with its valuation methods, with the relative-multiple frame justifying the price and the asset frames saying modestly expensive. The reverse-DCF base lands near $45, above the quote, and the priced-in operating growth solves near zero.
The counterintuitive part: the price assumes almost no growth, yet Axalta keeps generating strong cash. Q1 2026 delivered adjusted EPS of $0.56, beating the $0.50 guide, with adjusted EBITDA of $259 million and guidance to over $500 million of full-year free cash flow.
The defensive anchor is Refinish, the high-margin auto-body repair coatings business, stable near $500 million in sales for five quarters. The pending AkzoNobel merger, with $600 million of targeted run-rate synergies, is the swing factor on top of a steady cash compounder.
Bull Case
The surprising number on a coatings company facing soft demand is the cash: Axalta beat its Q1 2026 guidance with adjusted EPS of $0.56 against a $0.50 forecast, adjusted EBITDA of $259 million, and record first-quarter operating cash flow of $68 million, up $42 million year over year. For a business the market prices for near-zero growth, the cash generation is doing far better than the multiple implies, and management guided to more than $500 million of free cash flow for the full year. That gap between resilient cash and a no-growth valuation is the bull case in one line.
The Refinish franchise is why the cash is so steady. Refinish, coatings for collision and auto-body repair, sat near $500 million in sales for the fifth straight quarter, a razor-and-blade business where body shops standardize on Axalta's systems and reorder consistently regardless of the economic cycle. It is the largest and highest-margin of the four segments, and its stability underpins the whole company. The FY2025 10-K frames the commercial success of the business around developing technologically advanced products, the formulation and color-match edge that locks in refinish customers.
The self-help and merger levers add to it. Management is executing on price discipline and procurement-driven cost improvements, and trailing ROE near 15% on book of roughly $11 a share shows the capital efficiency of a focused coatings operator. The pending merger with AkzoNobel targets $600 million of run-rate synergies, a material lever on a company this size, advancing through regulatory and shareholder approvals. With the price implying essentially no operating growth and the reverse-DCF base near $45 against the $35 quote, an investor is paying for a steady cash compounder and getting the Refinish stability, the cost program, and the merger optionality with limited growth priced in.
Bear Case
Axalta sits at a vulnerable point in its end-market cycles, and the bull framing of stability understates how exposed three of its four segments are. Light Vehicle and Commercial Vehicle coatings track auto and truck build rates, Industrial tracks general manufacturing, and all three soften when demand cools. Management itself flagged that it is tracking toward the lower end of full-year guidance, citing macroeconomic uncertainty, North American demand challenges, and Middle East volatility. Trailing revenue has been declining at roughly 2.5%, and the reverse-DCF runs on negative historical growth, so the question is not whether Axalta grows fast but whether it can avoid shrinking through the cycle.
The valuation leaves modest room given that cyclicality. At $34.78 (June 27, 2026) the asset frames say expensive: the simple excess-return mark lands near $19, the Graham number near $21, and the ROIC-justified book near $8 because accounting ROIC sits around 6.9% against a 9.2% WACC. The relative and earnings frames cluster nearer the price, between $25 and $40, so the price is supported only if the current margin and cash generation hold. Peak-cycle coatings margins do not last forever; raw-material costs, particularly resins and pigments tied to petrochemical inputs, can compress the spread when input prices rise faster than Axalta can pass them through.
Leverage and the merger add risk on top. Net debt is roughly $2.64 billion against trailing operating income near $705 million, about 3.75x, with interest coverage near 4.1x, meaningful leverage for a cyclical materials business heading into a softer demand window. The AkzoNobel merger, while a synergy opportunity, is also integration and regulatory risk, and large coatings mergers can stumble on antitrust remedies, customer overlap, and the distraction of combining two organizations. The bet the price makes is that Axalta holds its margin and cash through a demand downturn, executes a complex merger cleanly, and captures the $600 million of synergies. If demand weakens further, if input costs rise, or if the merger slips, the cyclical reality reasserts itself and the no-growth price becomes a falling-earnings price.
Valuation
Inverting the $34.78 price gives a benign anchor. The price implies operating growth of roughly negative 0.5% a year, essentially flat, with the priced-in assumption characterized as within range. The reverse-DCF range runs from a low near $41 to a base near $45 to a high near $77, above the current price, which reflects the value of a steady cash-generative coatings franchise priced for no growth. Each one-point change in the cost of capital moves the implied growth by about 6.5 points, so the read is rate-sensitive but the central case is undemanding.
The model X-ray shows the relative-multiple support. The frames that justify the price are relative and growth: a relative P/E mark near $32 on a 14x sector median, a DCF exit-multiple near $33, and an EV/EBITDA relative near $40. The asset frames say expensive: simple excess return near $19, two-stage excess return near $24, the Graham number near $21, and ROIC-justified book near $8. The earnings-power and FCF-yield marks land near $27 to $30 on a zero-growth basis, close to the quote.
The spread is the information. The price is not a verdict on whether Axalta is a good coatings operator, the Refinish stability and cash flow say it is solid. It is a measure of how little growth the market is paying for: essentially flat operating income, with the merger synergies and any demand recovery as upside the static frames do not credit.
Catalysts
The defining catalyst is the AkzoNobel merger. The combination targets $600 million of run-rate synergies and is advancing through regulatory and shareholder approval processes. Merger milestones, antitrust remedies, and the integration plan are the largest swing factors for the stock over the next several quarters.
The near-term driver is the demand cycle against guidance. Q1 2026 beat with adjusted EPS of $0.56, and management guided Q2 to $0.67, Q3 to $0.73, and full-year to $2.56, while cautioning it is tracking toward the lower end on macroeconomic uncertainty, North American demand softness, and Middle East volatility. Whether demand stabilizes or deteriorates determines where in the range Axalta lands.
The structural anchor is Refinish stability and cash generation. Refinish held near $500 million in sales for five quarters, and management guided to over $500 million of full-year free cash flow. Watch segment demand trends in Light Vehicle, Industrial, and Commercial Vehicle, raw-material cost movements, free-cash-flow delivery, the pace of price and procurement-driven cost improvements, and merger-approval progress.
Sources: StockTitan and Investing.com (AXTA Q1 2026 results, adjusted EPS $0.56 beat, EBITDA $259M, >$500M FCF guidance, quarterly EPS guidance), Sahm Capital and Simply Wall St (full-year tracking toward lower end, macro and North American demand challenges), The Globe and Mail earnings call (Refinish stability near $500M, $600M AkzoNobel synergy target).
Peer Cohorts (Per Segment, With Filing Citations)
Performance Coatings (reported)
- SHW (THE SHERWIN-WILLIAMS COMPANY)
- (no filing in the citation store)
- PPG (PPG INDUSTRIES INC)
- (no filing in the citation store)
- RPM (RPM International Inc.)
- (no filing in the citation store)
Mobility Coatings (reported)
- PPG (PPG INDUSTRIES INC)
- (no filing in the citation store)
- RPM (RPM International Inc.)
- (no filing in the citation store)
- SHW (THE SHERWIN-WILLIAMS COMPANY)
- (no filing in the citation store)
- IOSP (INNOSPEC INC.)
- (no filing in the citation store)
- CBT (Cabot Corporation)
- (no filing in the citation store)
- NEU (NEWMARKET CORPORATION)
- (no filing in the citation store)
- AVNT (AVIENT CORPORATION)
- (no filing in the citation store)
- SXT (Sensient Technologies Corp)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.