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Axalta Coating Systems Down to Strong Sell on Market Woes

Zacks Investment Research downgraded Axalta Coating Systems Ltd.AXTA to a Zacks Rank #5 (Strong Sell) on Sep 12, 2015. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market.

Why the Downgrade?

Disappointing second-quarter 2015 results and weak outlook have made investors skeptical regarding Axalta Coating Systems' prospects, leading to a fall of nearly 12% in the company's share price since Aug 4. A brief snapshot of the company's quarterly results will justify the deterioration in its investment value.

Axalta Coating Systems' top line was adversely impacted by unfavorable foreign currency movements. Revenues dipped 2.9% year over year as volume growth of 4.8% and 3.4% gain from higher selling prices were more than offset by 11.1% forex losses. Revenues from the Performance Coatings and Transportation Coatings segments declined 3.9% and 1.4%, respectively. However, earnings per share came in at 35 cents per share, above the year-ago tally of 27 cents.

For 2015, Axalta Coating Systems anticipates net sales, including currency impacts, to decline in low- to mid-single digits versus the previous projection of flat-to-slightly down. Over the last 60 days, the Zacks Consensus Estimate on the stock declined 9.1% to 30 cents per share for the third quarter, by 0.9% to $1.13 for 2015 and by 0.7% to $1.36 for 2016. Also, the company has an Earnings ESP of -16.67% for third-quarter 2015 and -6.62% for 2016.

Stocks to Consider

Axalta Coating Systems currently has a market capitalization of $6.7 billion. Better-ranked stocks in the chemical industry include Innospec Inc. IOSP , Air Products & Chemicals Inc. APD and LyondellBasell Industries N.V. LYB . While Innospec sports a Zacks Rank #1 (Strong Buy), both Air Products & Chemicals and LyondellBasell Industries carry a Zacks Rank #2 (Buy).

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AIR PRODS & CHE (APD): Free Stock Analysis Report

LYONDELLBASEL-A (LYB): Free Stock Analysis Report

INNOSPEC INC (IOSP): Free Stock Analysis Report

AXALTA COAT SYS (AXTA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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