Value
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.6 |
| P/S | 9.3 |
| EV/EBITDA | 5.6 |
| Fwd P/E | 8.6 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 13.1x
- ▸PEG: 0.17
- ▸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.
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
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.
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. | Tripped→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. | ↓Deteriorating |
| 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.
Tripped→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.
↓DeterioratingBear 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.
Per-dimension breakdown
Quality
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.8 |
| ROA | 4.1 |
| Gross margin | 2.8 |
| Op margin | 6.1 |
| Net margin | 3.4 |
| Current ratio | 5.6 |
| FCF quality | 10.0 |
| Moat | 4.2 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 155% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
6.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.3 |
| EPS growth | 10.0 |
Momentum
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 7.6 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 1.6 |
- ▸Overbought (RSI 71)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.2 |
| Price target | 5.5 |
| erm sentiment | 5.0 |
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
4.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.1 |
| quality rank | 6.8 |
| growth rank | 1.7 |
Technical
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.1 |
| support resistance | 1.8 |
| 52w position | 9.3 |
Risk (lower is worse)
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.2 |
| days to cover | 3.7 |
| volatility | 5.8 |
| put call | 10.0 |
| implied vol | 0.4 |
| beta | 6.0 |
| debt equity | 4.6 |
- ▸High IV: 77%
Catalyst
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 5.6 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:4.7>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:72d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.7=NEGATIVE
Warning (1)
- MOMENTUM:4.7<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.67
Upside
-10.1%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.7=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.67 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.1, Growth at 6.7, and Sentiment at 6.1; the weakest are Peer rank at 4.1, Technical at 4.7, and Momentum at 4.7. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.67 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 PegTripped
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.