Here’s why Axalta Coating Systems (NYSE:AXTA) has caught investors’ attention

It is common for many investors, especially inexperienced ones, to buy stocks of companies with a good history even if those companies are loss-making. Sometimes, these histories can cloud investors’ minds, causing them to invest based on emotion rather than on the company’s sound fundamentals. While a well-funded company may suffer losses for years, it will need to turn a profit eventually, or investors will move on and the company will wither.

So if this idea of ​​high risk and high reward doesn’t appeal to you, you might be more interested in profitable, growing companies, like Axalta Coating Systems (NYSE:AXTA). While profit is not the only metric to consider when investing, it is worth recognizing companies that can consistently produce it.

Check out our latest analysis for Axalta Coating Systems

Axalta Coating Systems’ earnings per share rise

The market is a short-term voting machine, but a long-term weighing machine. So you would expect the stock price to eventually follow earnings per share (EPS) results. That makes EPS growth an attractive quality for any company. To the delight of shareholders, Axalta Coating Systems has posted impressive annual EPS growth of 46%, compounded, over the past three years. Such rapid growth may be fleeting, but it should be more than enough to pique the curiosity of cautious stock pickers.

One way to check a company’s growth is to look at how its revenue and earnings before tax (EBIT) margins are changing. The good news is that Axalta Coating Systems is growing its revenue, and its earnings before tax (EBIT) margins improved by 3.0 percentage points to 13% over the last year. That’s good news on both counts.

In the chart below, you can see how the company has grown its profits and revenue over time. For more details, click on the image.

In investing, as in life, the future matters more than the past. So why not take a look at this free Interactive visualization of Axalta coating systems forecast benefits?

Are Axalta Coating Systems Insiders Aligned With All Shareholders?

They say there’s no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market on fire. That’s because insider buying often signals that those closest to the company are convinced that the stock price will do well. However, small purchases don’t always indicate conviction, and insiders don’t always make the right choices.

Despite revenues of $1.3m, Axalta Coating Systems insiders have been buying shares in a big way, spending $2.1m on purchases over the last twelve months. It could be said that this level of buying shows real confidence in the company. We also note that it was independent director Kevin Stein who made the biggest acquisition, paying $1m for shares at around $27.38 each.

The story continues

The good news, aside from insider buying, for Axalta Coating Systems bulls is that insiders (collectively) have a significant investment in the stock. To be precise, they own $28 million worth of shares. This sizable investment should help increase the company’s long-term value. While that only represents about 0.4% of the company, it’s enough money to indicate alignment between the company’s management and common shareholders.

Is Axalta Coating Systems Worth a Spot on Your Watchlist?

Axalta Coating Systems’ earnings per share have been soaring, with very high growth rates. In addition, insiders have a significant stake in the company and have been buying more shares. These factors seem to indicate the company’s potential and that it has reached an inflection point. We suggest putting Axalta Coating Systems at the top of your watchlist. Still, you should learn more about the company. 2 warning signs we have spotted Axalta coating systems (one of which is of concern).

There are plenty of other companies whose shares are being bought by insiders. If you like Axalta Coating Systems, you’ll probably love this selection of attractively valued US companies that have had insiders buying shares in the last three months.

Please note that insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Do you have any comments on this article? Are you concerned about its content? Get in touch with us directly. You can also send an email to editorial-team (at) simplywallst.com.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

Do you have any comments on this article? Are you concerned about its content? Contact us directly. You can also send an email to [email protected]