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 Nasdaq, Inc.

This article appears in: Personal Finance Investing Ideas
Referenced Stocks: SHW , VAL

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