Critical Survey: Axalta Coating Systems (AXTA) & Ferro (FOE)

Axalta Coating Systems (NYSE: AXTA) and Ferro (NYSE:FOE) are both mid-cap basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, risk and profitability.

Earnings and Valuation

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This table compares Axalta Coating Systems and Ferro’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Axalta Coating Systems $4.38 billion 1.80 $36.70 million $1.19 27.14
Ferro $1.40 billion 1.47 $57.05 million $1.29 18.90

Ferro has lower revenue, but higher earnings than Axalta Coating Systems. Ferro is trading at a lower price-to-earnings ratio than Axalta Coating Systems, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Axalta Coating Systems and Ferro, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Axalta Coating Systems 1 10 6 0 2.29
Ferro 0 0 7 0 3.00

Axalta Coating Systems presently has a consensus target price of $33.47, suggesting a potential upside of 3.61%. Ferro has a consensus target price of $24.83, suggesting a potential upside of 1.86%. Given Axalta Coating Systems’ higher probable upside, equities analysts plainly believe Axalta Coating Systems is more favorable than Ferro.

Insider and Institutional Ownership

95.9% of Ferro shares are owned by institutional investors. 2.1% of Axalta Coating Systems shares are owned by insiders. Comparatively, 2.3% of Ferro shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Axalta Coating Systems and Ferro’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Axalta Coating Systems 0.84% 20.91% 4.47%
Ferro 4.08% 33.58% 7.20%

Volatility and Risk

Axalta Coating Systems has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, Ferro has a beta of 1.53, meaning that its share price is 53% more volatile than the S&P 500.

Summary

Ferro beats Axalta Coating Systems on 10 of the 14 factors compared between the two stocks.

About Axalta Coating Systems

Axalta Coating Systems Ltd., through its subsidiaries, manufactures, markets, and distributes high performance coatings primarily for the transportation industry. It operates in two segments, Performance Coatings and Transportation Coatings. The Performance Coatings segment offers various specially-formulated water and solvent borne products and systems that are used to refinish damaged vehicles for independent body shops, multi-shop operators, and original equipment manufacturer (OEM) dealership body shops. This segment also provides functional, and decorative liquid and powder coatings for use in various industrial applications, including architectural cladding and fittings, automotive coatings, general industrial, job coaters, electrical insulation coatings, HVAC, appliances, rebar, and oil and gas pipelines. This segment sells its products under the Cromax, Standox, Spies Hecker, Syrox, Voltatex, AquaEC, ZENITH, Durapon, Hydropon, Ceranamel, Alesta, Nap-Gard, Abcite, and Plascoat brands directly to customers, as well as through a network of independent local distributors. The Transportation Coatings segment develops and supplies a line of coatings products, such as electrocoat, primer, basecoat, and clearcoat products for OEMs of light and commercial vehicles; and various coatings systems for various commercial applications, including HDT, bus, rail, and ACE. This segment offers its commercial vehicles under the Imron, Imron ExcelPro, Imron Elite, Centari, Rival, Corlar epoxy undercoats, and AquaEC brands. The company sells and ships its products directly to light vehicle OEM customers. Axalta Coating Systems Ltd. has operations in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company was formerly known as Axalta Coating Systems Bermuda Co., Ltd. and changed its name to Axalta Coating Systems Ltd. in August 2014. Axalta Coating Systems Ltd. was founded in 1866 and is headquartered in Philadelphia, Pennsylvania.

About Ferro

Ferro Corporation produces specialty materials in the United States and internationally. It operates through four business units: Tile Coating Systems; Porcelain Enamel; Performance Colors and Glass; and Color Solutions. The company offers frits, porcelain and other glass enamels, glazes, stains, decorating colors, pigments, inks, polishing materials, dielectrics, electronic glasses, and other specialty coatings. Its products are used in appliances, automobiles, building and renovation, electronics, household furnishings, industrial products, packaging, and sanitary applications. The company markets and sells its products directly, as well as through agents and distributors. Its customers include manufacturers of ceramic tile, construction materials, automobile parts, automobiles, architectural and container glass, and electronic components and devices. Ferro Corporation was founded in 1919 and is headquartered in Mayfield Heights, Ohio.

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