Sherwin-Williams Strikes New 52-Week High at $256.16 - Analyst Blog

Shares of The Sherwin-Williams Company (SHW) touched a new 52-week high of $256.16 on Dec 11, 2014, before eventually closing the day lower at $254.21.

The paint giant, with a market cap of roughly $24.4 billion, has seen its shares rise around 39% over the past one year. Its year-to-date return is roughly 40%, much higher than the S&P 500’s total return of 12.3%. Average volume of shares traded over the last three months is roughly 615.2K. The company’s long-term projected EPS growth is around 13.9%.

What’s Driving SHW Up?

Sherwin-Williams, which is among the leading paint companies along with PPG Industries Inc. (PPG) and Akzo Nobel NV (AKZOY), is striving to expand its product portfolio and market footprint through various acquisitions and collaborations. The company recently announced the launch of its HGTV HOME Paints at Lowe’s personal stores and on its website Lowes.com.

The line of products from Sherwin-Williams’ HGTV HOME portfolio will showcase advanced exterior and interior paint programs that will be offered at stores of both Sherwin-Williams and Lowe’s. This association thus successfully combines the design proficiency of HGTV with the superior quality of Sherwin-Williams’ paints, to promise homeowners a wholesome satisfactory experience.

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.

Moreover, 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.

Acquisitions contributed 3.3% to the rise in revenues. Segment-wise, the Paint Stores Group turned in another strong performance in the third quarter. It was also a record quarter in terms of net operating cash generation.

Moreover, house remodeling activity has picked up and growth is positive year-to-date in both the residential and non-residential markets. Many of the industrial coatings markets too are displaying increasing strength.

Sherwin-Williams currently carries a Zacks Rank #2 (Buy).

Another company in the basic materials sector worth considering is Valhi, Inc. (VHI), with a Zacks Rank #1 (Strong Buy).

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