Why Are Analysts Expecting Axalta’s Revenue to Rise in 4Q16?

Analysts are expecting Axalta Coating Systems (AXTA) to post revenue of $1.02 billion in 4Q16. That’s a 1.2% rise year-over-year compared to $1.01 billion in 4Q15.

For fiscal 2016, Axalta expects its revenue to remain flat compared to fiscal 2015. Excluding foreign exchange translations, Axalta expects 2016 revenues to rise 4.0%–6.0%.

AXTA’s peer PPG Industries (PPG) announced its 4Q16 earnings and reported revenue of $3.5 billion in 4Q16. That’s a 1.5% rise year-over-year. You can read our analysis of PPG’s 4Q16 earnings at PPG Industries’ 4Q16 EPS versus Street Expectations and Forex Impact.

Sherwin-Williams (SHW) reported revenue of $2.8 billion in 4Q16, a 6.8% rise year-over-year. Valspar (VAL) reported 4Q16 revenue of $1.1 billion, a fall of 4.0% on a year-over-year basis.

Axalta expects the positive pricing that affected it in 3Q16 to continue to have a positive impact in 4Q16. New business contracts that AXTA signed in 4Q16 will be one of its primary revenue drivers. Other influencing factors include the introduction of new products, expanding existing products in new geographies, and the expansion of existing facilities.

On the other hand, revenues could be dampened due to expected weaknesses in the Europe and Latin American regions. Another challenge could be a continuing strength for the dollar. From the beginning of October 2016 through the end of December 2016, the dollar rose 7.0% over the basket of currencies.

You can indirectly hold Axalta by investing in the iShares US Basic Materials (IYM), which has invested 1.1% of its portfolio in Axalta as of February 2, 2017.