RPM International (RPM) vs. Axalta Coating Systems (AXTA) Financial Analysis

RPM International (NYSE: RPM) and Axalta Coating Systems (NYSE:AXTA) are both mid-cap construction companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.

Dividends

RPM International pays an annual dividend of $1.28 per share and has a dividend yield of 2.5%. Axalta Coating Systems does not pay a dividend. RPM International pays out 94.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RPM International has increased its dividend for 42 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for RPM International and Axalta Coating Systems, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RPM International 0 4 3 0 2.43
Axalta Coating Systems 1 6 8 0 2.47

RPM International presently has a consensus price target of $57.33, suggesting a potential upside of 10.45%. Axalta Coating Systems has a consensus price target of $33.50, suggesting a potential upside of 8.06%. Given RPM International’s higher possible upside, equities research analysts clearly believe RPM International is more favorable than Axalta Coating Systems.

Valuation & Earnings

This table compares RPM International and Axalta Coating Systems’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RPM International $4.96 billion 1.40 $181.82 million $1.35 38.45
Axalta Coating Systems $4.07 billion 1.85 $41.80 million $0.24 129.17

RPM International has higher revenue and earnings than Axalta Coating Systems. RPM International 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.

Insider and Institutional Ownership

75.5% of RPM International shares are held by institutional investors. Comparatively, 99.3% of Axalta Coating Systems shares are held by institutional investors. 2.1% of RPM International shares are held by company insiders. Comparatively, 2.3% of Axalta Coating Systems shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
RPM International 3.67% 24.73% 7.07%
Axalta Coating Systems 1.46% 19.91% 4.30%

Volatility & Risk

RPM International has a beta of 1.53, indicating that its stock price is 53% more volatile than the S&P 500. Comparatively, Axalta Coating Systems has a beta of 1.55, indicating that its stock price is 55% more volatile than the S&P 500.

Summary

RPM International beats Axalta Coating Systems on 9 of the 17 factors compared between the two stocks.

RPM International Company Profile

RPM International Inc., through its subsidiaries, manufactures, markets and sells various specialty chemical product lines, including specialty paints, protective coatings, roofing systems, sealants and adhesives, focusing on the maintenance of industrial, specialty and consumer markets. The Company operates through three segments: the industrial reportable segment (industrial segment), the specialty reportable segment (specialty segment) and the consumer reportable segment (consumer segment). Its family of products includes those marketed under brand names, such as API, Carboline, CAVE, DAP, Day-Glo, Dri-Eaz, Dryvit, Euclid, EUCO, Fibergrate, Flecto, Flowcrete, Grupo PV, Hummervoll, illbruck, Mohawk, Rust-Oleum, Stonhard, TCI, Toxement, Tremco, Tuf-Strand, Universal Sealants, Viapol, Watco and Zinsser. As of May 31, 2016, its subsidiaries marketed products in approximately 164 countries and territories, and operated manufacturing facilities in approximately 120 locations.

Axalta Coating Systems Company Profile

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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