We are retaining our Neutral recommendation on leading paints
The Sherwin-Williams Company
) following its mixed third-quarter 2012 results. Adjusted
earnings (excluding unfavorable currency impact) of $2.29 a share
beat the Zacks Consensus Estimate of $2.19.
Net sales rose roughly 5% year over year to $2.6 billion on the
back of higher paint sales volume and pricing, but missed the
Zacks Consensus Estimate of $2.67 billion. Revenues from the core
Paint Stores Group division soared roughly 10% in the quarter,
benefiting from better pricing and increased volume.
Sherwin-Williams raised its earnings outlook for fiscal 2012 and
now expect earnings in the range of $6.35-$6.55 per share for the
year, up from the previous expectation of $6.20 to $6.40.
Ohio-based Sherwin-Williams is among the leading manufacturers of
paints, coatings and related products. The company's philosophy
is to diversify its customer base and expand its operations into
Sherwin-Williams follows a strategy of growing through
acquisitions and internal initiatives such as efficient working
capital management and innovation. The company continues to
invest in its Paint Stores Group segment to boost market share.
Sherwin-Williams is also implementing effective pricing
strategies to offset higher raw materials costs.
However, Sherwin-Williams continue to contend with raw material
costs inflation. Higher raw material costs impacted every
reporting segment in the third quarter. Moreover, the company
faces significant challenge in the remainder of 2012 given the
weakening market conditions in Europe and Latin America.
Sherwin-Williams also remains exposed to currency headwinds. We
are also concerned about the weakness in the commercial
Sherwin-Williams, which competes with
E. I. du Pont de Nemours and Company
PPG Industries Inc.
), retains a short-term Zacks #2 Rank (Buy).
DU PONT (EI) DE (DD): Free Stock Analysis
PPG INDS INC (PPG): Free Stock Analysis
SHERWIN WILLIAM (SHW): Free Stock Analysis
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