Shares of The Sherwin-Williams Company (SHW) touched a new 52-week high of $261.96 on Dec 22, 2014, before eventually closing marginally lower at $261.65.
The paint giant, with a market cap of roughly $25.12 billion, has seen its shares rise around 46.7% over the past year. Its year-to-date return is roughly 44%, much higher than the S&P 500’s total return of 14.7%. Average volume of shares traded over the last three months is roughly 645.3K. The company’s long-term projected EPS growth is 14.2%.
Growth Drivers
Sherwin-Williams, which is among the leading paint companies along with PPG Industries Inc. (PPG) and Akzo Nobel NV (AKZOY), is poised to benefit from the recent fall in oil prices as it will lower its input costs and thus expand margins.
The company has recently revised its earnings per share forecast for 2014, and provided a primary outlook for 2015.
The company expects full-year 2014 consolidated net sales to improve by around 9% from 2013 and projects earnings per share in the range of $8.75–$8.80, compared to earnings per share of $7.26 in 2013. The guidance includes the negative impact of the Comex paint stores acquisition which is expected to hurt earnings per share by 28 cents in 2014.
For full-year 2015, Sherwin-Williams expects consolidated net sales to improve by 7%–11% over 2014. At this level, the company expects full-year 2015 earnings per share in the band of $10.65–$10.85. The outlook for full-year 2015 includes the assumption that the recent launch of the HGTV HOME paint solutions at Lowe’s will help sales rise by a low single-digit percentage and slightly add to earnings per share in 2015.
Sherwin-Williams posted strong third-quarter 2014 results on Oct 28, on the back of improved operating results at its Paint Stores, Global Finishes and Consumer Groups.
Sherwin-Williams’ earnings rose roughly 31.4% year over year to a record $3.35 per share in the third quarter from $2.55 earned in the year-ago quarter. Its adjusted earnings (barring the acquisition-related impact and currency translation) of $3.39 per share surpassed the Zacks Consensus Estimate of $3.18. It also recorded net sales of around $3,150.6 million in the quarter, a 10.6% year-over-year rise.
Sherwin-Williams is striving to expand its product portfolio and market footprint through various acquisitions and collaborations. The company has recently announced the launch of its HGTV HOME Paints at Lowe’s personal stores and on its website Lowes.com.
Given that Lowe’s is well recognized by homeowners in the global home remodeling space, collaborating with Lowe’s should prove beneficial for Sherwin-Williams’ HGTV HOME solutions.
This association thus successfully combines the design proficiency of HGTV with the superior quality of Sherwin-Williams’ paints, to promise homeowners a wholesome and satisfactory experience.
Sherwin-Williams is a Zacks Rank #2 (Buy) stock.
Another company in the basic materials industry worth considering is Valhi, Inc. (VHI), sporting a Zacks Rank #1 (Strong Buy).
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