Axalta Coating Systems Ltd. (NYSE:AXTA) just released its latest third-quarter results and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$1.0b, some 7.0% above estimates, and statutory earnings per share (EPS) coming in at US$0.35, 21% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Axalta Coating Systems after the latest results.
Taking into account the latest results, the most recent consensus for Axalta Coating Systems from 16 analysts is for revenues of US$4.20b in 2021 which, if met, would be a meaningful 12% increase on its sales over the past 12 months. Per-share earnings are expected to surge 317% to US$1.66. In the lead-up to this report, the analysts had been modelling revenues of US$4.13b and earnings per share (EPS) of US$1.52 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 7.5% to US$30.89, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Axalta Coating Systems at US$35.00 per share, while the most bearish prices it at US$21.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Axalta Coating Systems' past performance and to peers in the same industry. It's clear from the latest estimates that Axalta Coating Systems' rate of growth is expected to accelerate meaningfully, with the forecast 12% revenue growth noticeably faster than its historical growth of 1.0%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Axalta Coating Systems to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Axalta Coating Systems following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Axalta Coating Systems. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Axalta Coating Systems going out to 2024, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Axalta Coating Systems (1 is significant) you should be aware of.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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