Reviewing PPG Industries (PPG) & Axalta Coating Systems (AXTA)

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

Dividends

PPG Industries pays an annual dividend of $1.80 per share and has a dividend yield of 1.6%. Axalta Coating Systems does not pay a dividend. PPG Industries pays out 35.9% of its earnings in the form of a dividend. Axalta Coating Systems has raised its dividend for 44 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
PPG Industries 12.21% 27.85% 9.19%
Axalta Coating Systems 1.46% 19.91% 4.30%

Insider and Institutional Ownership

73.5% of PPG Industries shares are held by institutional investors. Comparatively, 96.9% of Axalta Coating Systems shares are held by institutional investors. 0.7% of PPG Industries shares are held by insiders. Comparatively, 2.3% of Axalta Coating Systems shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares PPG Industries and Axalta Coating Systems’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
PPG Industries $14.75 billion 1.99 $877.00 million $5.02 22.96
Axalta Coating Systems $4.07 billion 2.01 $41.80 million $0.29 115.66

PPG Industries has higher revenue and earnings than Axalta Coating Systems. PPG Industries 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 Recommendations

This is a breakdown of current ratings and recommmendations for PPG Industries and Axalta Coating Systems, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PPG Industries 0 8 7 0 2.47
Axalta Coating Systems 1 6 9 0 2.50

PPG Industries currently has a consensus target price of $119.36, indicating a potential upside of 3.55%. Axalta Coating Systems has a consensus target price of $33.64, indicating a potential upside of 0.31%. Given PPG Industries’ higher probable upside, equities analysts plainly believe PPG Industries is more favorable than Axalta Coating Systems.

About PPG Industries

PPG Industries, Inc. manufactures and distributes a range of coatings and specialty materials. The Company has two segments: Performance Coatings and Industrial Coatings. The Performance Coatings segment includes the refinish, aerospace, protective and marine, architectural businesses. The Industrial Coatings segment includes the automotive original equipment manufacturer (OEM), industrial coatings, packaging coatings, coatings services and specialty coatings and materials businesses. The Company’s geographical segments include the United States, Canada, Western Europe, Latin America, Central and Eastern Europe, the Middle East, Africa and Asia Pacific. The Company’s brands include PPG, GLIDDEN, COMEX, OLYMPIC, DULUX, SIKKENS, PPG PITTSBURGH PAINTS, MULCO, FLOOD, LIQUID NAILS, SICO, CIL, RENNER, TAUBMANS, WHITE KNIGHT, BRISTOL, HOMAX, DEKORAL, TRILAK, GORI, and BONDEX, among others.

About Axalta Coating Systems

Axalta Coating Systems Ltd. is a holding company. The Company is a manufacturer, marketer and distributor of coatings systems primarily serving the transportation industry. The Company’s segments include Performance Coatings and Transportation Coatings. Through its Performance Coatings segment, the Company provides liquid and powder coatings solutions to a fragmented and local customer base. Through its Transportation Coatings segment, the Company provides coating technologies to original equipment manufacturers (OEMs) of light and commercial vehicles. The Performance Coatings segment serves various end markets, including refinish and industrial. The Company develops, markets and supplies a portfolio of coatings systems and color matching technologies. The Company also develops and supplies an array of coatings systems for a range of commercial applications, including heavy-duty truck (HDT), bus, rail and agricultural construction equipment (ACE).

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