Sherwin-Williams (SHW) Touches New 52-Week High at $217.99 - Analyst Blog


Shares of Sherwin-Williams ( SHW ) reached a new 52-week high of $217.99 on Aug 22, exceeding its previous high of $217.85. Its shares pulled back to end the day at $216.96.

The paint giant, which has a market cap of roughly $21 billion, has seen its shares rise around 19% so far this year, higher than the S&P 500's corresponding return of 9%. Average volume of shares traded over the last three months is roughly 498.4K. The company's long-term projected EPS growth is around 13.1%.

Driving Factors

Sherwin-Williams, a Zacks Rank #3 (Hold) stock, posted strong second-quarter 2014 results on July 17 riding on healthy gains across its Paint Stores, Consumer and Global Finishes Groups segments.

Adjusted earnings for the quarter topped the Zacks Consensus Estimate. Revenues rose by double-digits year over year on higher paint sales volume and contributions from acquisitions, and beat expectations. The company raised its earnings guidance for 2014 to $8.50 to $8.70 per share from $8.12 to $8.32 per share expected earlier.

Sherwin-Williams follows a strategy of growth through acquisitions and internal initiatives such as efficient working capital management and innovation. Its philosophy is to diversify its customer base and expand its operations into various geographies.

The acquisition of the U.S. and Canadian businesses of Consorcio Comex S.A. de C.V. has ushered in significant opportunity for Sherwin-Williams. The acquisition is a strategic fit for the company and has enabled it to better serve its customers across some of its key markets. Sherwin-Williams is making good progress in integrating the acquired business.

Moreover, Sherwin-Williams' aggressive cost control initiatives, working capital reductions, supply chain optimization and productivity improvement should continue to yield margin benefits. It is also implementing effective pricing strategies to offset higher raw material costs. The company also remains committed to deliver incremental returns to shareholders.

That said, Sherwin-Williams faces persistent challenges in its Latin American operations. It also remains exposed to currency headwinds and volatility in raw material costs

Other Stocks to Consider

Other companies in the specialty chemicals space with favorable Zacks Rank include Green Plains Inc. ( GPRE ), BioAmber Inc. ( BIOA ) and Ferro Corporation ( FOE ). While Green Plains retains a Zacks Rank #1 (Strong Buy), both BioAmber and Ferro hold a Zacks Rank #2 (Buy). 

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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: Investing , Business , Stocks

Referenced Stocks: SHW , FOE , GPRE , BIOA

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