Shares of The Valspar Corporation (VAL) touched a new 52-week high of $88.16 on Dec 24, 2014, before eventually closing marginally lower at $87.83.
The paints and coatings maker, with a market cap of $7.24 billion, has seen its shares rise around 26% over the past year. Its year-to-date return is roughly 25%, much higher than the S&P 500’s total return of 14.9%. Average volume of shares traded over the last three months is roughly 517.5K. The company’s long-term projected EPS growth is 11.2%.
Growth Drivers
Valspar posted its fourth-quarter 2014 results on Nov 26. The paint maker saw its profits surge 70% year over year to roughly $108.1 million in fourth-quarter fiscal 2014 on continued momentum across its coatings businesses, backed by higher volumes and strong performance across all its product lines.
The company’s adjusted earnings (barring restructuring charges) of $1.38 per share for the quarter topped the Zacks Consensus Estimate of $1.15. For fiscal 2014, adjusted earnings were $4.35 per share, coming ahead of the Zacks Consensus Estimate of $4.12.
Revenues rose roughly 11.3% year over year to $1,233 million in the fourth quarter on gains at the company’s Paints and Coatings divisions, and strong performance across international regions. For fiscal 2014, revenues increased 10.2% year over year to $4,522.4 million. Valspar reported record sales and earnings in fiscal 2014.
Valspar, which is one of the prominent paint makers along with Akzo Nobel NV (AKZOY) and PPG Industries Inc. (PPG), is poised to benefit from the recent fall in oil prices as it will lower its input costs and thus expand margins.
However, the company expects sales growth for fiscal 2015 to be in the low single-digits owing to the negative impact of currency translation, higher interest expenses and absence of the 53rd week in fiscal 2015.
Valspar currently carries a Zacks Rank #3 (Hold).
Another company in the paints & related products sector worth considering is The Sherwin-Williams Company (SHW), carrying a Zacks Rank #2 (Buy).
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