Value
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.3 |
| P/S | 9.3 |
| EV/EBITDA | 5.0 |
| Fwd P/E | 8.3 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 14.0x
- ▸PEG: 0.20
- ▸Attractively valued
AXTA · Why this verdict
Why Axalta Coating Systems (AXTA) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.8/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Axalta Coating Systems is a specialty chemicals company with strong 169% cash conversion, a forward P/E of 12.5x and a breakout chart with a golden cross. The price of $34.07 is only 2.7% below the $34.99 analyst target, so upside is thin against 5.4% downside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The price of $34.07 is only 2.7% below the $34.99 analyst target against 5.4% downside to the stop, a reward-to-risk of 0.5. Estimated upside | Upside should widen above 10% through target raises or a pullback. | ↓Deteriorating |
| CounterA golden-cross breakout and rising volume could lift price past the target and push analysts to revise upward. | ||
A breakout setup is in place, with a golden cross, price above all moving averages, RSI at 58 and bullish MACD, and rising on-balance volume. Chart pattern detection | Price should hold above its 200-day average and the momentum score should stay above 6.0. | ↓Deteriorating |
| CounterVolume component scores only 2.6/10, so the breakout lacks strong participation and could fail near the analyst target. | ||
Cash conversion is excellent at 169% FCF/NI with a Piotroski score of 8/9, even though the business has no competitive moat. Quality breakdown | Free cash flow should stay above net income, funding debt paydown and buybacks. | ↓Deteriorating |
| CounterReturns are modest (ROE score 4.5/10) and gross margin scores only 2.7/10, so strong cash conversion may reflect working-capital release rather than durable economics. | ||
The stock trades at a forward P/E of 12.5x with a PEG of 0.17, attractively valued as earnings growth scores the maximum 10/10. Valuation breakdown | Earnings growth should keep the PEG below 1.0 and support a modest re-rating. | ↓Deteriorating |
| CounterRevenue growth scores only 2.9/10, so earnings growth may come from cost cuts that cannot be repeated. | ||
Axalta beat EPS in 2 of the last 4 quarters and missed in 2, including a 10.1% miss in the latest report, for an average surprise of +2.7%. Avg surprise pct | EPS surprises should be positive in the report due 2027-02-09. | ↓Deteriorating |
| CounterThe beats of 10.9% and 11.7% outweighed the misses, so the average surprise is positive and the latest miss may be a one-off. | ||
The price of $34.07 is only 2.7% below the $34.99 analyst target against 5.4% downside to the stop, a reward-to-risk of 0.5.
↓DeterioratingEstimated upside
- Expectation
- Upside should widen above 10% through target raises or a pullback.
CounterA golden-cross breakout and rising volume could lift price past the target and push analysts to revise upward.
A breakout setup is in place, with a golden cross, price above all moving averages, RSI at 58 and bullish MACD, and rising on-balance volume.
↓DeterioratingChart pattern detection
- Expectation
- Price should hold above its 200-day average and the momentum score should stay above 6.0.
CounterVolume component scores only 2.6/10, so the breakout lacks strong participation and could fail near the analyst target.
Cash conversion is excellent at 169% FCF/NI with a Piotroski score of 8/9, even though the business has no competitive moat.
↓DeterioratingQuality breakdown
- Expectation
- Free cash flow should stay above net income, funding debt paydown and buybacks.
CounterReturns are modest (ROE score 4.5/10) and gross margin scores only 2.7/10, so strong cash conversion may reflect working-capital release rather than durable economics.
The stock trades at a forward P/E of 12.5x with a PEG of 0.17, attractively valued as earnings growth scores the maximum 10/10.
↓DeterioratingValuation breakdown
- Expectation
- Earnings growth should keep the PEG below 1.0 and support a modest re-rating.
CounterRevenue growth scores only 2.9/10, so earnings growth may come from cost cuts that cannot be repeated.
Axalta beat EPS in 2 of the last 4 quarters and missed in 2, including a 10.1% miss in the latest report, for an average surprise of +2.7%.
↓DeterioratingAvg surprise pct
- Expectation
- EPS surprises should be positive in the report due 2027-02-09.
CounterThe beats of 10.9% and 11.7% outweighed the misses, so the average surprise is positive and the latest miss may be a one-off.
Per-dimension breakdown
Quality
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.5 |
| ROA | 3.6 |
| Gross margin | 2.7 |
| Op margin | 5.1 |
| Net margin | 3.2 |
| Current ratio | 5.6 |
| FCF quality | 10.0 |
| Moat | 4.2 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 169% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
6.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
| EPS growth | 10.0 |
Momentum
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 4.4 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.4 |
| Price target | 5.5 |
| erm sentiment | 4.8 |
Insider
5.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.5 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.7 |
| quality rank | 6.3 |
| growth rank | 0.7 |
Technical
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.2 |
| 52w position | 9.4 |
| gap | 4.0 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.4 |
| days to cover | 6.2 |
| volatility | 4.9 |
| put call | 6.7 |
| implied vol | 6.6 |
| beta | 6.0 |
| debt equity | 4.8 |
Catalyst
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 3.8 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:7.7>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:95d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.5=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.49
Upside
-6.7%
Downside
13.7%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 70, MACD bullish
EdgeSector Rotation — Basic Materials sector out of favor, value=7.1
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 7.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.5=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.49 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 7.7, Value at 7.1, and Growth at 6.5; the weakest are Technical at 3.4, Peer rank at 3.6, and Catalyst at 4.3. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.49 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Cash Conversion
Trip ifFree cash flow to net income conversion falls below 100% from current 169%.
- P2Attractive Valuation Earnings Growth
Trip ifForward P/E rises above 18x from current 12.5x.
- P3Limited Upside To Analyst Target
Trip ifUpside to the analyst target exceeds 15% from current 2.7%.
- P4Breakout Momentum Setup
Trip ifPrice falls below the 200-day average and below the stop of $32.23.
- P5Split Earnings Record
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.