Analyzing Element Solutions (NYSE:ESI) and Axalta Coating Systems (NYSE:AXTA)

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

Valuation & Earnings

This table compares Axalta Coating Systems and Element Solutions”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Axalta Coating Systems	$5.28 billion	1.19	$391.00 million	$2.09	14.14
Element Solutions	$2.50 billion	2.44	$244.20 million	$0.99	25.41

Axalta Coating Systems has higher revenue and earnings than Element Solutions. Axalta Coating Systems is trading at a lower price-to-earnings ratio than Element Solutions, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Axalta Coating Systems	8.81%	24.92%	7.19%
Element Solutions	9.58%	14.01%	7.28%

Insider and Institutional Ownership

98.3% of Axalta Coating Systems shares are owned by institutional investors. Comparatively, 92.3% of Element Solutions shares are owned by institutional investors. 0.3% of Axalta Coating Systems shares are owned by company insiders. Comparatively, 6.9% of Element Solutions shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Axalta Coating Systems has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500. Comparatively, Element Solutions has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Axalta Coating Systems and Element Solutions, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Axalta Coating Systems	0	9	10	0	2.53
Element Solutions	0	2	7	1	2.90

Axalta Coating Systems currently has a consensus target price of $36.06, suggesting a potential upside of 22.04%. Element Solutions has a consensus target price of $30.75, suggesting a potential upside of 22.24%. Given Element Solutions’ stronger consensus rating and higher probable upside, analysts clearly believe Element Solutions is more favorable than Axalta Coating Systems.

Summary

Element Solutions beats Axalta Coating Systems on 9 of the 15 factors compared between the two stocks.

About Axalta Coating Systems

Axalta Coating Systems Ltd., through its subsidiaries, manufactures, markets, and distributes high-performance coatings systems in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company operates through two segments, Performance Coatings and Mobility Coatings. It also offers water and solvent-borne products and systems to repair damaged vehicles for independent body shops, multi-shop operators, and original equipment manufacturer (OEM) dealership body shops. In addition, the company provides functional and decorative liquid, and powder coatings used in various industrial applications, including building materials, cabinet, wood and luxury vinyl flooring and furniture market under the Voltatex, AquaEC, Durapon, Hydropon, UNRIVALED, Ceranamel, Industrial, Corlar Industrial, Tufcote, Imron Industrial, Alesta, Teodur, Nap-Gard, Abcite, and Plascoat brands for powder coatings. Further, it develops and supplies electrocoat, primer, the basecoat, and clearcoat products for OEMs of light and commercial vehicles; and coatings systems for various commercial applications, including HDT, MDT, bus, and rail under the Imron, Imron Elite, Centari, Rival, Corlar epoxy undercoats, and AquaEC brands. The company offers products under the Audurra, Abcite, Alesta, AquaEC, Centari, Ceranamel, Challenger, Chemophan, ColorNet, Cromax, Cromax Mosaic, Durapon 70, Duxone, Harmonized Coating Technologies, Imron ExcelPro, Lutophen, Nason, Spies Hecker, Standox, Stollaquid, Syntopal, Syrox, Raptor, U-POL, and Vermeera brand names. The company was formerly known as Axalta Coating Systems Bermuda Co., Ltd. and changed its name to Axalta Coating Systems Ltd. in August 2014. Axalta Coating Systems Ltd. was founded in 1866 and is headquartered in Glen Mills, Pennsylvania.

About Element Solutions

Element Solutions Inc operates as a specialty chemicals company in the United States, China, and internationally. The company operates in two segments, Electronics, and Industrial & Specialty. The Electronics segment researches, formulates, and sells specialty chemicals and materials for various types of electronics hardware products. This segment also supplies surface mount technologies, fluxes, thermal management material, coatings, and other attachment materials; chemical formulations to the electronics industry; and advanced copper interconnects, die attachment, sintered silver material, adhesives, wafer bump processes, and photomask technologies for semiconductor industry. It primarily serves mobile communications, computers, automobiles, and aerospace equipment industries. The Industrial & Specialty segment provides industrial solutions, which include chemical systems that protect and decorate metal and plastic surfaces; consumable chemicals that enable printing image transfer on flexible packaging materials; and chemistries used in water-based hydraulic control fluids for offshore energy production applications. It serves aerospace, automotive, construction, consumer electronics, consumer packaged goods, and oil and gas production end markets. The company was formerly known as Platform Specialty Products Corporation and changed its name to Element Solutions Inc in January 2019. Element Solutions Inc was founded in 1785 and is headquartered in Fort Lauderdale, Florida.