Paint giant Sherwin-Williams’ (SHW) shares hit yet another 52-week high of $280.79 on Feb 6, before closing a notch lower at $280.31.
The Ohio-based company has a market cap of roughly $26.9 billion. Average volume of shares traded over the last three months is roughly 619.5K.
Driving Factors
Sherwin-Williams’ adjusted earnings rose 34% year over year to $1.53 per share in the fourth quarter of 2014 from $1.14 per share earned in the year-ago quarter. This came on the back of improved operating results in its Paint Stores, Global Finishes and Consumer Groups. Earnings beat the Zacks Consensus Estimate of $1.36 per share by a wide margin.
Sherwin-Williams, expects consolidated net sales in the first quarter of 2015 to increase in the mid-single-digit percentage range year over year. The company anticipates earnings in the band of $1.30-$1.45 per share versus $1.15 earned in the first quarter of 2014.
For 2015, Sherwin-Williams expects consolidated net sales to rise in a high single-digit percentage compared with 2014. The company predicts net earnings for 2015 in the band of $10.90-$11.10 per share versus $8.78 per share earned in 2014.
Paint and coatings demand outlook for 2015 appears encouraging in most domestic markets. Residential starts and turnover gained momentum in the fourth quarter, which augurs well for 2015. Contracts for new non-residential square footage rose 7% year-over-year last year, and the pace of demand growth remains strong across a number of segments. Although a slowdown in manufacturing activities was witnessed towards the end of 2014, it is expected to drive sustained growth and demand for industrial coatings segment.
Outside the U.S, the sluggish market conditions and currency devaluation in Europe as well as in many Latin American countries will remain challenging. However, lower pricing of crude oil, if sustained, is expected to have a favorable impact on the petrochemical side of the company’s raw material basket.
Other Stocks to Consider
Other companies in the basic materials space worth considering include Compass Minerals International Inc. (CMP), Innophos Holdings Inc (IPHS) and Olin Corp. (OLN) with all holding a Zacks Rank #1 (Strong Buy).
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