AXALTA COATING SYSTEMS LTD. (AXTA): what the price assumes

In the published model solve dated 2026-Q2, anchored at $37.29, AXALTA COATING SYSTEMS LTD. (AXTA) is priced for +6.0% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/AXTA

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

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.

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=12)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Axalta has agreed to combine with AkzoNobel in an all-stock merger of equals at 0.6539 AkzoNobel shares for each Axalta share, so the quote today carries a Dutch listing and a completion probability inside it, not just a verdict on Axalta.
• Refinish coatings sold into collision repair are the largest revenue line at 40% of the total, and the company names the erosion risk itself: driver-assistance technology has reduced the rate and amount of vehicle collisions, which negatively impacts demand for our refinish coatings.
• Second-quarter results arrive July 28 and holders vote on the merger August 5, so the two questions that matter most both resolve inside two weeks.

Bull Case

Matching paint is harder than it sounds. A body shop repairing a four-year-old sedan has to reproduce a factory finish that has spent four summers in the sun, mixing it on site from a kit of components, and the owner will notice if the door is half a shade off. The 10-K describes the resulting position without ceremony: Axalta is one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. Paint is a small line on a collision-repair invoice and a large share of the risk that the job gets rejected. That is a good place for a supplier to sit.

The advantage is delivered locally rather than centrally. Due to the local nature of the refinish industry, our sales force operates on a regional/country basis to provide clients with responsive customer service and local insight, which is a slow and unglamorous kind of durability: thousands of independent and multi-shop body shops, each trained on one system, each carrying one company's color decks. The customer list shows what that buys. Inside Performance Coatings, selling into more than 140 countries, Our top ten customers accounted for approximately 17% of our Performance Coatings net sales during the year ended December 31, 2025. Very few industrial suppliers get to describe their customer base that way.

The economics back the description up. Trailing operating margin runs 14.1%, ahead of the 12.8% PPG carries on revenue roughly three times the size. Revenue of $5.11B converted into $488M of free cash flow over the trailing year, on a business whose fixed asset base is modest by chemical-industry standards. None of that requires a story about new end markets; it is the ordinary output of a franchise that renews itself one body shop at a time.

Set that against what the price is demanding, and the gap is the argument. Today's quote asks operating profit to compound roughly 1.9% a year over a five-year stretch. Management has raised its own guidance on six separate occasions since 2015, and the pace the price needs sits below what the business has produced in its better years. A bull here is not underwriting acceleration. They are underwriting the absence of decline.

Capital allocation has been quietly friendly to holders. The share count has shrunk about 1.2% a year over the four years to March 2026, which is buyback deployment showing up in the one place it cannot be dressed up. Then there is the deal. If the merger clears, current holders end up with roughly 45% of a combined coatings company with a wider product range and the cost overlap two large competitors inevitably carry. The 10-K, written before any of this, names AkzoNobel, BASF and PPG as the multinationals it primarily competes against in vehicle coatings. One of those three is now the partner.

Bear Case

The variable with the most leverage on this stock is not paint volume. It is whether competition regulators are comfortable with two of the largest vehicle-coatings suppliers in the world becoming one. The overlap is not subtle, and Axalta documented it before the deal existed: the 10-K names AkzoNobel, BASF and PPG as the multinationals it primarily competes against in the light and commercial vehicle end-markets, and the merger partner heads that list. Completion is targeted for late 2026 or early 2027 and stays conditioned on regulatory clearance. Until those clearances land, a holder owns an approval calendar as much as a coatings business.

A deal that breaks hands the price back to standalone economics, and standalone economics are flat. Revenue slipped about 2.6% over the trailing year. On the vehicle side, Mobility Coatings: Net sales increased 1.1% for the year ended December 31, 2025 compared with the year ended December 31, 2024. The price asks operating profit to compound roughly 1.9% a year over a five-year stretch. That is not a heroic requirement. It is also not a requirement a shrinking top line is currently meeting, and the space between the two is where the risk lives.

Beneath both scenarios sits a slower problem the company states plainly about itself. Driver-assistance systems work. The 10-K puts it this way: these advancements have reduced the rate and amount of vehicle collisions, which negatively impacts demand for our refinish coatings; this reduction could accelerate in the future and have a material adverse impact on our results of operations. Refinish is 40% of revenue and the richest part of the mix. Fewer crashes is not a cycle a supplier waits out.

Concentration runs the other direction in the vehicle business. Our top ten customers accounted for approximately 61% of our Mobility Coatings net sales during the year ended December 31, 2025. Compare that with the 17% the top ten represent inside Performance Coatings and the shape of the risk is clear: losing one platform award at one global automaker is a visible dent, and those awards get re-competed on price against three multinational rivals.

The balance sheet amplifies rather than cushions. Net debt of $2.641B works out to 3.7 times operating profit. Liquid assets total $608M. Interest coverage sits at 4.2x, which is comfortable at current volumes and gets uncomfortable quickly if refinish demand steps down while the merger is still with regulators. The bull answer to all of this is that the price is asking for very little, and that is true. A low bar in a business whose largest end market faces structural erosion, carried on real debt, is still a different proposition from a low bar in a growing one.

Valuation

Two things are priced into this ticker at once. One is a coatings company with $5.11B of revenue and 14.1% trailing operating margins. The other is 0.6539 of an AkzoNobel share, which is what each Axalta share converts into if the merger closes. Since the announcement, the quote has tracked a Dutch listing and an approval calendar as much as Axalta's own quarters. That is worth holding in mind before reading any market judgment into the number below.

Taken as a standalone business, the price of $32.75 works out to roughly fourteen dollars of enterprise value for each dollar of company-wide operating profit, and that embeds operating growth of about 1.9% a year across a five-year stretch, discounted at just under nine percent. The company earns a 14.1% operating margin today on a trailing basis. Revenue, meanwhile, has been travelling in the other direction, and finished the trailing year lower by about 2.6%. The assumption is undemanding measured against what this company has produced in better years. It is not undemanding measured against last year.

The methods disagree in an unusual direction for a stock that has been out of favour. Peer multiples land above today's price rather than below it. The price sits roughly 23% above where the earnings-power methods land, about 28% above the forward-growth methods, and about 57% above the asset-value lens. That is the signature of a value read rather than a growth bet: the cheap-looking methods are the ones agreeing with the market, and the expensive-looking gap sits with book-value arithmetic, which for a coatings business built on brands, distribution and formulation know-how was never going to be the binding lens.

One read deserves a pause. Capitalizing a five-year average of operating income, with one-time charges added back and no growth credited at all, gets within about a tenth of today's price. A method that assumes Axalta never improves again still nearly reaches the quote. Whatever else is true, the price is not paying for a transformation.

Against the cohort, the position is small on size and strong on profitability. SHW turned over $23.94B of revenue in its trailing year at a 10.9% profit margin, with growth of 3.9%. PPG did $16.12B at a 12.8% operating margin. RPM did $7.71B at an 8.6% profit margin. Axalta is the smallest of the four and the only one with revenue moving backwards, yet it out-earns PPG at the operating line, 14.1% against 12.8%.

The balance sheet is what would matter most if the deal fell over. Net debt of $2.641B, gross debt of $3.249B and $608M of liquid assets put leverage at 3.7 times operating profit, with interest coverage of 4.2x. The company is not burning cash: 488 million dollars of free cash flow came through on the trailing year and the share count has fallen about 1.2% a year since March 2022. That combination services obligations comfortably at today's volumes. It leaves less slack than the headline multiple suggests if refinish demand steps down while the merger is still in front of regulators.

Catalysts

Second-quarter results are scheduled for July 28, 2026. For the full year the company has guided to low single-digit net sales growth and free cash flow above $500 million. That cash-flow guide sits a little above what the trailing year actually delivered, which makes the print a clean test of whether the guide survives contact with a soft demand backdrop.

The vote is the larger event. Axalta holders meet on August 5, 2026, and AkzoNobel convenes its own extraordinary general meeting to approve the all-share combination. On July 23 the two companies signed a second amendment to the merger agreement, lowering the board threshold for senior appointments, chair designations and remuneration policy to two-thirds of non-executive directors following dialogue with shareholders. Governance terms being reopened two weeks before a vote is information in itself.

Closing is targeted for late 2026 or early 2027, subject to regulatory clearance and customary conditions. The AkzoNobel circular also describes a pre-completion distribution aggregating EUR 2.5 billion as a condition to closing, paid before Axalta holders receive their shares in the combined company. Between the earnings print, the two meetings and the antitrust calendar, most of what will move this stock over the next six months is already on a published schedule.

Peer Cohorts (Per Segment, With Filing Citations)

Performance Coatings (reported)

• SHW (THE SHERWIN-WILLIAMS COMPANY)
• FY2025 10-K: …do business with, could result in losses, damage our reputation or relationships with customers and suppliers, expose us to the risks of litigation, regulatory action and liability, disrupt our operations and have a material adverse effect on our business, results of operations and financial condition. To date, we…
• FY2025 10-K: …from operations, which was used for investment in capital expenditures, funding acquisitions and returning cash to shareholders through dividends and repurchases of common stock. Although the softer-for-longer demand environment is expected to continue in 2026, we have confidence in our differentiated strategy,…
• PPG (PPG INDUSTRIES INC)
• FY2025 10-K: …quarter 2026, demand in Mexico is expected to be strong and consumer sentiment in Europe is expected to be tepid. First quarter 2026 organic sales for the Global Architectural Coatings segment are anticipated to increase in the range of by a low single-digit percentage to a mid-single-digit percentage compared to the…
• FY2025 10-K: …company-owned distribution networks, and directly to manufacturing companies and retail customers. Each product delivered to a third party customer is considered to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the…
• RPM (RPM International Inc.)
• FY2025 10-K: …span across a wide variety of applications. Consumer Home Improvement Products. Within our Consumer reportable segment, we generally serve the home improvement market with products designed for niche architectural, rust-preventative, decorative and special purpose paint and caulking and sealing applications. The…
• FY2025 10-K: …differentiate competitors in these markets include product quality, depth of product line, and design-and-fabrication services. Our products for these applications are sold under our Fibergrate, Chemgrate, Corgrate, Fibregrid, Safe-T-Span, Bison, Jouplast and Ocape brand names. Sealants, Waterproofing, Concrete and…

Mobility Coatings (reported)

• PPG (PPG INDUSTRIES INC)
• FY2025 10-K: …supplier network, including combustion engine, commercial, and electric vehicles, and automotive parts and accessories, including battery-related components; On-site coatings services within several customer manufacturing locations as well as at regional service centers. Direct to manufacturing companies and various…
• FY2025 10-K: …to customers, government agencies and independent distributors Ennis-Flint® Segment Overview This reportable business segment primarily supplies a variety of protective coatings, adhesives, sealants and finishes along with pavement marking products and related chemicals, transparencies and paint films. Alliances PPG…
• RPM (RPM International Inc.)
• FY2025 10-K: …span across a wide variety of applications. Consumer Home Improvement Products. Within our Consumer reportable segment, we generally serve the home improvement market with products designed for niche architectural, rust-preventative, decorative and special purpose paint and caulking and sealing applications. The…
• FY2025 10-K: …differentiate competitors in these markets include product quality, depth of product line, and design-and-fabrication services. Our products for these applications are sold under our Fibergrate, Chemgrate, Corgrate, Fibregrid, Safe-T-Span, Bison, Jouplast and Ocape brand names. Sealants, Waterproofing, Concrete and…
• SHW (THE SHERWIN-WILLIAMS COMPANY)
• FY2025 10-K: …from operations, which was used for investment in capital expenditures, funding acquisitions and returning cash to shareholders through dividends and repurchases of common stock. Although the softer-for-longer demand environment is expected to continue in 2026, we have confidence in our differentiated strategy,…
• FY2025 10-K: …do business with, could result in losses, damage our reputation or relationships with customers and suppliers, expose us to the risks of litigation, regulatory action and liability, disrupt our operations and have a material adverse effect on our business, results of operations and financial condition. To date, we…
• IOSP (INNOSPEC INC.)
• FY2025 10-K: …The segment has grown organically through our development of new products to address increased demand for fuel, focus on fuel economy, compatibility of renewable fuels, higher efficiency engine technologies and legislative developments, including tightening global emissions regulations. We are also 2 applying these…
• FY2025 10-K: …fuel efficiency, boost engine performance and reduce harmful emissions. Our Oilfield Services business supplies chemicals for drilling, completion, production and drag reducing agents ("DRA") which make oil and gas exploration and production more cost-efficient and environmentally friendly. Segment Information The…
• CBT (Cabot Corporation)
• FY2025 10-K: …conductive additives and other materials for battery applications, and inkjet dispersions for high-speed industrial printing applications, including packaging and graphic arts. The recent investments we have made for growth in this segment, including with respect to these specific areas of focus, are described below…
• FY2025 10-K: …of the construction and infrastructure, automotive, electronics and consumer products industries. Demand for our conductive additives for use in batteries is largely driven by the trend in electrification of vehicles and the increase in energy storage systems. Demand for fumed silica is mainly influenced by trends in…
• NEU (NEWMARKET CORPORATION)
• FY2025 10-K: …are to reduce friction, prevent wear, control formation of sludge and oxidation, and prevent rust. Engine oil additives are typically sold to lubricant manufacturers who combine them with a base oil fluid to meet internal, industry, and OEM specifications. Key drivers of engine oil additives demand are the number of…
• FY2025 10-K: …and OEMs worldwide. Afton continues to successfully implement techniques to drive efficiency in technology discovery and development, while aligning our internal testing to market changes, research, customer support, and predictive capabilities around the world in support of our goals of providing market-driven…
• AVNT (AVIENT CORPORATION)
• FY2025 10-K: …end markets, partially offset by growth in the healthcare end market. Operating income increased $5.1 million, or 1.7%, in 2025 compared to 2024. The increase was primarily driven by improved mix and cost savings from productivity and restructuring actions, in addition to lower incentive compensation cost. Specialty…
• FY2025 10-K: …are primarily customer receivables, inventories, net property, plant and equipment, intangible assets and goodwill. Corporate assets and liabilities primarily include cash, debt, pension and other employee benefits, environmental liabilities, and other unallocated corporate assets and liabilities. The accounting…
• SXT (Sensient Technologies Corp)
• FY2025 10-K: …positions as of December 31, 2025. As part of its commitment to quality as a competitive advantage, the Company's production facilities hold various certifications, such as those under the International Organization for Standardization (ISO) and those recognized by the Global Food Safety Initiative (GFSI), including…
• FY2025 10-K: …ingredients, and essential oils as well as flavor systems, including taste modulation, that are responsive to consumer trends and the processing needs of our food and beverage customers. These activities include the development of functional ingredient systems for foods and beverages, savory flavors, and ingredient…

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.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• 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.