The Valspar Corporation (VAL) announced that it would release its results for the third quarter of 2011 before the market opens on August 15, 2011.
Valspar reported net earnings of 64 cents in the second quarter of 2011 versus last year’s 61 cents, which were in line with the Zacks Consensus Estimate. In the upcoming quarter, the Zacks Consensus Estimate for Valspar is pegged at a profit of 80 cents per share, reflecting annualized growth of 14.71%.
With respect to earnings surprises, the company outdid the Zacks Consensus Estimate in the last three quarters. This is reflected in the average earnings surprise of 2.00%, with positive surprises in each of the quarters involved.
Second Quarter Review
The Valspar Corporation’s net earnings moved up 3 cents to 64 cents in the second quarter of 2011 from last year’s 61 cents and were in line with the Zacks Consensus Estimate. Adjusted net earnings excluded charges relating to acquisition of 5 cents per share and restructuring actions of 1 cent per share. Including these charges, earnings per share were 58 cents in the second quarter of 2011.
Quarterly sales jumped about 23.5% year over year to $992.7 million, driven by new business efforts, pricing and acquisitions, offset by rising raw material costs, and surpassing the Zacks Consensus Estimate of $953 million.
Sales in Valspar’s Coatings segment increased 15.2% year over year to $509.1 million and sales in the Paints segment shot up to $418.4 million, up 37.6% from the prior-year quarter. Sales from inter-segment business increased 13.4% year over year to $65.2 million.
Valspar continues to expect adjusted net income per share in the range of $2.45 to $2.65 per share in fiscal 2011. The company continues to boost its selling prices and take steps to further reduce its cost structure while maintaining investments in its brands and technology.
Agreement of Estimate Revisions
Out of the 10 analysts covering the stock for the third quarter of fiscal 2011, none have made any revision to the earnings in the last 30 days or in the last 7 days. Similarly, for fiscal year 2011, out of the 10 analysts covering the stock, none have made any revision to the earnings in the last 30 days or in the last 7 days
Magnitude of Estimate Revisions
The third-quarter quarter 2011 estimate was flat at 80 cents in the last 7 days, whereas it decreased by 1 cent, from 81 cents to 80 cents, in the last 30 days. Similarly, for fiscal year 2011, the Zacks Consensus Estimate was flat at $2.56 in the last 7 days, whereas it decreased by 1 cent, from $2.57 to $2.56, in the last 30 days.
Our Take
Valspar’s solid results and robust margin gains in the past few quarters stem from its cost reduction efforts, increasing product prices and productivity gains. We are more optimistic on Valspar’s long-term performance, which is likely to be driven by volume increases in both the Paint and Coatings categories.
The company retains a Zacks #3 Rank on its stock, which translates to short-term Hold recommendation.
Major competitors of Valspar Corporation are Sherwin Williams Company (SHW) and PPG Industries Inc. (PPG).
PPG INDS INC (PPG): Free Stock Analysis Report
SHERWIN WILLIAM (SHW): Free Stock Analysis Report
VALSPAR CORP (VAL): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment