On the four Ms, Axalta Coating Systems Ltd earns 60 for management and 66 for moat. The management score rests on a return on invested capital of 8.4% and a gross margin of 32.6% — figures that describe a business earning a respectable return on what it employs. Debt sits at 1.45x equity.
Three independent anchors set the price worth paying. Growth is modelled at 6.5% a year, the rate measured from the filings. The exit multiple assumed is 13.0x. That produces an intrinsic value of $9.73, a 10-CAP price of $25.89 and a payback time price of $27.76, with the value zone set at the highest of the three, $27.76. Today's price of $31.85 sits 15% above it.
The price is above the value zone and the business scores 66 for moat and 60 for management. Neither test argues for paying up here.
| Price | $31.85 |
| Market cap | $6.8B |
| P/E ratio | 19.7x |
| Return on invested capital | 8.4% |
| Gross margin | 32.6% |
| Debt to equity | 1.45x |
| Free cash flow yield | 6.5% |
| Growth rate used | 6.5% |
| Growth rate measured | 6.0% |
| Exit multiple assumed | 13.0x |
| Company | Moat | Buy price |
| Solstice Adv Materials Inc (SOLS) | 16 | $19.32 |
| Hawkins Inc (HWKN) | 93 | $73.94 |
| International Flavors & Fragrances (IFF) | 25 | $44.44 |
| PPG Industries (PPG) | 58 | $72.98 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Axalta Coating Systems Ltd rather than accepting ours.