) reached a new 52-week high of $74.24 on May 22, above its
previous high of $74.11. The leading paints and coatings maker,
which has a market cap of roughly $6.5 billion, has seen its
share rise roughly 18% year-to-date. Average volume of shares
traded over the last three months is around 568K.
Valspar's shares broke above its 200-day moving average in Nov
2011 and continue trade above it, manifesting the bullish trend.
It has outperformed the S&P 500 over the past year and has
clocked a return of roughly 54% for the period versus around 28%
for the benchmark.
What's Driving Valspar Up?
Valspar's shares are screaming higher, hitting new highs
following the release of its second-quarter fiscal 2013 (ended
Apr 26, 2013) results that showed a rebound in its paint
Adjusted earnings for the second quarter, reported on May 14,
topped the Zacks Consensus Estimate. Valspar witnessed a recovery
in its paint business in the quarter, driven by a rebound in the
domestic housing market. The company backed its earnings forecast
for fiscal 2013 and sees improved results in the second half.
Valspar has a strong pipeline of new products and significant
opportunities for share gains in both its Paints and Coatings
segments. The company is managing its cost well and maintaining a
cost structure that is appropriate for the current external
environment. Valspar should also benefit from its restructuring
actions in fiscal 2013.
Winning new businesses also remains a company-wide focus that
will position Valspar well for the future and help it offset
lower demand in core markets. Its fastest growing markets are the
emerging economies. The company expects to gain from new
businesses in consumer paints, packaging, coil and wood coatings
in second-half fiscal 2013.
Valspar also remains committed to boost shareholder returns
leveraging healthy cash flows. In addition, it is making good
progress with the integration of the acquired assets from Ace
That said, we account for irregular demand trends across
Valspar's end markets and weakness for some of its products in
overseas markets. We also remain cautious about cost pressures
associated with raw material inflation. As such, the stock
currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other companies in the specialty chemicals industry with
favorable Zacks Rank are
OM Group Inc.
). While both American Vanguard and OM Group hold a Zacks Rank #1
(Strong Buy), Ferro retains a Zacks Rank #2 (Buy).
AMER VANGUARD (AVD): Free Stock Analysis
FERRO CORP (FOE): Free Stock Analysis Report
OM GROUP INC (OMG): Free Stock Analysis
VALSPAR CORP (VAL): Free Stock Analysis
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