Sherwin-Williams (SHW) Upped To Buy On Solid Q1, Upbeat View
Zacks Investment Research | May 23, 2017 01:35AM ET
Paint giant Sherwin-Williams (NYSE:SHW) was upgraded to a Zacks Rank #2 (Buy) on May 23. Going by the Zacks model, companies sporting a Zacks Rank #2 have strong chances of outperforming the broader market.
Why the Upgrade?
Sherwin-Williams recorded higher year-over-year profits in first-quarter 2017. Moreover, adjusted earnings of $2.27 per share in the quarter beat the Zacks Consensus Estimate of $2.07. Improved operating results at the Paint Stores and Global Finishes Groups led to the earnings upside.
Sherwin-Williams Company (The) Price and Consensus
The company recorded net sales of $2,761.4 million in the first quarter, marking a 7.3% year-over-year rise. Revenues beat the Zacks Consensus Estimate of $2,740 million. Increased paint sales volumes in Paint Stores Group and a change in revenues classification led to higher sales.
Sherwin-Williams expects mid-to-high single digit percentage year-over-year increase in net sales for the second quarter. The company also expects earnings in second-quarter 2017 in the range of $4.15–$4.35 per share, including a 25 cents charge from costs associated with the planned acquisition of Valspar.
The company also raised its earnings view for 2017 and now expects earnings per share for the year in the range of $13.65 to $13.85 per share, compared to $11.99 earned in 2016. This includes a charge of 40 cents per share related to the planned acquisition of Valspar and a benefit of about 25 cents related to income tax provision.
Estimates for Sherwin-Williams for second-quarter 2017 have been going up of late. Over the last 30 days, the Zacks Consensus Estimate for the quarter has increased by around 2% to $4.54 per share.
Earnings estimates for the current year also witnessed an increase of 3.6% over the past month to $14.24 per share.
Sherwin-Williams’ shares have rallied 5.9% in the last three months, outperforming the Zacks categorized Paints & Allied Products industry’s gain of 4%.
Sherwin-Williams is benefiting from its cost control initiatives. Moreover, it remains focused on growth through acquisitions and expansion of operations. Sherwin-Williams should gain from the planned acquisition of Valspar, which will allow it to strengthen its position as a leading paints and coatings provider globally.
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