The Valspar Corporation
), the sixth largest paint and coatings manufacturer globally,
has beefed up its quarterly dividend by 15% to 23 cents per share
from 20 cents. This raises the company's annual dividend to 92
cents per share from the prior payout of 80 cents, representing a
The revised quarterly dividend is payable on December 28, 2012,
to shareholders of record as of December 17, 2012. This
represents the Minneapolis-based company's 35th straight year of
Separately, the company's board has approved the repurchase of 15
million shares. The new repurchase authorization, which is
effective immediately, replaces the prior authorization of
October 2010 and has no expiry date. The company bought back 12.4
million shares for $514 million through October 26, 2012, under
the earlier repurchase authorization. It had roughly 90 million
shares outstanding as of December 4.
Valspar has a strong pipeline of new products and significant
opportunities for share gains in both its Paint and Coatings
segments. It continues to see strength in its coatings business
as evidenced by higher volumes, new business wins and market
share gains. While the company expects the overall demand
environment to be uneven moving ahead, it envisions a
double-digit growth in earnings in fiscal 2013.
Valspar expects sales to benefit from the diverse mix of
businesses and growth in the fast growing coatings markets in
Asia and Latin America. The company is managing its costs well
and maintaining a cost structure that is appropriate for the
current external environment.
However, Valspar's Paint segment performed weakly in the most
recent quarter. The segment's growth has been hurt by a weak
residential housing market in Australia, which may continue to
affect sales moving ahead. The company also remains exposed to
cost pressures associated with raw material inflation.
Valspar, which competes with
Sherwin Williams Company
PPG Industries Inc.
), currently retains a short-term Zacks #2 Rank (Buy). We have a
long-term Neutral recommendation on the stock.
PPG INDS INC (PPG): Free Stock Analysis
SHERWIN WILLIAM (SHW): Free Stock Analysis
VALSPAR CORP (VAL): Free Stock Analysis
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