Paint Makers Valspar, Sherwin-Williams Earnings Up

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The housing market is in recovery mode, and homebuilding stocks are not the only way to take advantage of this trend. Investors can also look at paint makers Valspar ( VAL ) andSherwin-Williams ( SHW ).

Earlier this month, Valspar squeaked by views with fiscal Q4 earnings that rose 2% to 86 cents a share. It topped expectations by a penny. But sales eased 2% to $1.02 billion vs. views of $1.07 billion.

Despite the mixed quarterly results, Valspar's profit grew 24% to $3.28 a share for fiscal 2012, ended Oct. 26. That's up from 19% growth in fiscal 2011. The company pegged fiscal 2013 earnings at $3.65 to $3.85 a share, which represents growth of 11% to 17%.

The company pays a dividend of 20 cents a share each quarter, or 80 cents on an annualized basis. It has an annualized yield of about 1.3%, which is the second lowest in IBD's paints industry group. Still, Valspar has raised its dividend for 34 straight years.

Valspar is near a record high after clearing a 59.91 buy point from a flat base last week. Despite light holiday trading, the stock broke out on volume 79% above average.

Sherwin-Williams has delivered four straight quarters of double-digit profit growth. In late October, it reported Q3 earnings that rose 31% to $2.24 a share and beat expectations by 4 cents. But sales rose 5% to just over $2.6 billion, slightly missing views.

Analysts see Sherwin-Williams' full-year profit rising 32% to $6.52 a share. That would be up from 10% growth in 2011.

Earlier this month, the company agreed to buy Mexican paint firm Consorcio Comex for $2.34 billion in cash, including debt. The deal will greatly increase Sherwin-Williams' presence in the Mexico market, where it has few stores.

Sherwin-Williams pays a quarterly dividend of 39 cents a share. It has an annualized yield of about 1%. The company has raised its payout for more than 30 years.

Last week, Sherwin-Williams cleared a 156.60 buy point in a six-week flat base. The structure could also be interpreted as a cup-without-handle pattern.

But either way, the buy point is the same. The stock is holding near a record high.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: SHW , VAL

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