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

Analyst Ratings

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

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

Axalta Coating Systems currently has a consensus price target of $33.50, suggesting a potential upside of 2.13%. RPM International has a consensus price target of $57.33, suggesting a potential upside of 7.39%. Given RPM International’s higher possible upside, analysts clearly believe RPM International is more favorable than Axalta Coating Systems.

Insider & Institutional Ownership

99.3% of Axalta Coating Systems shares are held by institutional investors. Comparatively, 75.5% of RPM International shares are held by institutional investors. 2.3% of Axalta Coating Systems shares are held by company insiders. Comparatively, 2.1% of RPM International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

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

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Axalta Coating Systems $4.07 billion 1.96 $41.80 million $0.24 136.67
RPM International $4.96 billion 1.44 $181.82 million $1.29 41.39

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.

Dividends

RPM International pays an annual dividend of $1.28 per share and has a dividend yield of 2.4%. Axalta Coating Systems does not pay a dividend. RPM International pays out 99.2% 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 raised its dividend for 42 consecutive years.

Risk and Volatility

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

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).

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.

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