Value
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.3 |
| P/S | 9.3 |
| EV/EBITDA | 5.8 |
| Fwd P/E | 8.8 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 12.5x
- ▸PEG: 0.19
- ▸Attractively valued
AXTA · Why this verdict
Why Axalta Coating Systems (AXTA) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward P/E of 12.0x and a PEG ratio of 0.19, the shares are priced at a meaningful discount to their earnings growth rate, offering a valuation cushion that limits downside if operating results hold. Valuation breakdown | Forward P/E expands toward 16x over the next 12 months as the market assigns a higher multiple to the sustained earnings cadence. | →Stable |
| CounterDeclining revenue at approximately -1% may justify the compressed multiple; if top-line erosion accelerates, the low PEG reflects shrinking earnings power rather than mispricing and the valuation floor falls with it. | ||
Three beats in the last four quarters, including an 11.7% positive surprise in the most recent period, reflect a pattern of under-promising and over-delivering that has consistently rewarded holders through each reporting cycle. Earnings | EPS surprise remains positive for the next two quarterly reports, sustaining the beat cadence. | →Stable |
| CounterRevenue is declining at approximately -1%, which narrows the operating levers available to manufacture future upside; a tighter cost environment could end the beat streak without the top-line recovery to replace it. | ||
Free cash flow running at 144% of net income means the business generates substantially more cash than reported earnings reflect, providing a financial resilience buffer that the headline profit figures alone do not capture. Quality breakdown | Free cash flow conversion stays above 100% of net income over the next four quarters, preserving balance-sheet flexibility. | →Stable |
| CounterA debt-to-equity ratio of 1.3 means a significant portion of generated cash is already committed to debt service; the high conversion rate may not translate into fully discretionary capital for shareholders or accelerated deleveraging. | ||
With only 0.6% headroom to the $33.97 resistance target and a risk/reward ratio of 0.09-to-1, the setup offers negligible reward against a 7% potential drawdown — an RSI at 77 compounds the near-term entry risk. Bear case | Price either breaks cleanly above $34.50 on volume, establishing a new higher base, or consolidates at lower levels to restore a more favorable entry geometry. | →Stable |
| CounterVolume accumulation via a rising on-balance volume trend and an above-200-day moving-average position suggest the underlying trend remains intact; an overbought RSI can persist for weeks in a strong tape before reversing. | ||
At a forward P/E of 12.0x and a PEG ratio of 0.19, the shares are priced at a meaningful discount to their earnings growth rate, offering a valuation cushion that limits downside if operating results hold.
→StableValuation breakdown
- Expectation
- Forward P/E expands toward 16x over the next 12 months as the market assigns a higher multiple to the sustained earnings cadence.
CounterDeclining revenue at approximately -1% may justify the compressed multiple; if top-line erosion accelerates, the low PEG reflects shrinking earnings power rather than mispricing and the valuation floor falls with it.
Three beats in the last four quarters, including an 11.7% positive surprise in the most recent period, reflect a pattern of under-promising and over-delivering that has consistently rewarded holders through each reporting cycle.
→StableEarnings
- Expectation
- EPS surprise remains positive for the next two quarterly reports, sustaining the beat cadence.
CounterRevenue is declining at approximately -1%, which narrows the operating levers available to manufacture future upside; a tighter cost environment could end the beat streak without the top-line recovery to replace it.
Free cash flow running at 144% of net income means the business generates substantially more cash than reported earnings reflect, providing a financial resilience buffer that the headline profit figures alone do not capture.
→StableQuality breakdown
- Expectation
- Free cash flow conversion stays above 100% of net income over the next four quarters, preserving balance-sheet flexibility.
CounterA debt-to-equity ratio of 1.3 means a significant portion of generated cash is already committed to debt service; the high conversion rate may not translate into fully discretionary capital for shareholders or accelerated deleveraging.
With only 0.6% headroom to the $33.97 resistance target and a risk/reward ratio of 0.09-to-1, the setup offers negligible reward against a 7% potential drawdown — an RSI at 77 compounds the near-term entry risk.
→StableBear case
- Expectation
- Price either breaks cleanly above $34.50 on volume, establishing a new higher base, or consolidates at lower levels to restore a more favorable entry geometry.
CounterVolume accumulation via a rising on-balance volume trend and an above-200-day moving-average position suggest the underlying trend remains intact; an overbought RSI can persist for weeks in a strong tape before reversing.
TrendMatrix Research · core thesis
Engine thesis — one sentence
The shares carry a low forward multiple and strong cash conversion, but have run to within pennies of resistance with a risk/reward ratio of 0.09-to-1 — the earnings beat record is real, yet the geometry of the trade no longer supports new entry at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.4 |
| ROA | 4.2 |
| Gross margin | 2.8 |
| Op margin | 5.4 |
| Net margin | 3.6 |
| Current ratio | 7.3 |
| FCF quality | 9.8 |
| Moat | 3.6 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 144% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.3 |
| EPS growth | 10.0 |
- ▸Declining revenue: -1%
Momentum
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 2.8 |
| OBV | 1.5 |
| MA position | 9.0 |
| Volume | 0.2 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.8 |
| Analyst rating | 7.2 |
| Price target | 5.5 |
- ▸LLM news sentiment: +0.55 (n=1)
Insider
5.1/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.2 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.0 |
| quality rank | 6.3 |
| growth rank | 2.0 |
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.9 |
| support resistance | 1.2 |
| 52w position | 9.6 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.5 |
| days to cover | 8.1 |
| volatility | 5.6 |
| put call | 6.3 |
| implied vol | 4.6 |
| beta | 6.0 |
| debt equity | 4.4 |
Catalyst
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 4.8 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+2Passed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:23d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.7<4.5
- ASYMMETRY:-1.1=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.11
Upside
-10.0%
Downside
9.1%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 23d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.7<4.5, ASYMMETRY:-1.1=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.11 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.2, Sentiment at 6.9, and Growth at 6.2; the weakest are Peer rank at 3.6, Momentum at 3.7, and Technical at 4.2. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.11 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Beat Discipline
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Valuation Discount On Peg
Trip ifForward P/E expands above 20x, indicating re-rating has already occurred and the valuation discount no longer exists.
- P3Superior Free Cash Conversion
Trip ifFree cash flow conversion falls below 80% of net income for 2 consecutive quarters.
- P4Price Exhausted At Resistance
Trip ifPrice breaks above $36.00 on above-average volume for 5 or more consecutive trading sessions, confirming the resistance has been overcome.