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Axalta Plans to Expand Its Capacity

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Axalta’s capacity

On March 5, 2018, Axalta (AXTA) announced that it acquired a manufacturing and distribution facility in Sacramento, California. The facility is 150,000 square feet with a production capacity of more than 15 million gallons. Axalta plans to develop an industrial wood coatings business and a refinish coatings business. However, Axalta didn’t provide financial details about the transaction.

In 4Q17, the refinish business revenue grew 4.7%, while industrial end market sales increased 56.8%. The new facility is expected to support the growth in North American and improve Axalta’s revenues.

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Michael Cash, Axalta’s Senior Vice President and President of Industrial Coatings, said, “Axalta has built an industry-leading business based on listening to, and reacting to, the increasing requirements of our customer base. Axalta will continue to make these necessary investments to ensure we have the technologies our customers need to remain competitive and the manufacturing capability to get those products to them as quickly as possible.”

Stock price update

Axalta gained 5.50% and closed at $32.82 for the week ending March 9, 2018. The significant gains reversed the 100-day moving average trend. Axalta traded 3.0% above its 100-day moving average price of $31.85. The gains also helped Axalta’s year-to-date return at 2.4%. Sherwin-Williams (SHW) and PPG Industries (PPG) have gained 1.8% and 0.7%, respectively, while RPM International (RPM) has declined 2.1%. The latest short interest data as of February 28 indicate a decline in Axalta’s short interest from 3.5% to 3.1%. Axalta’s 14-day relative strength index is at 65, which indicates that the stock isn’t overbought or oversold.

Investors could invest in Axalta indirectly through the iShares U.S. Basic Materials ETF (IYM). IYM has invested 1.0% of its holdings in Axalta as of March 9, 2018.

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