Sherwin-Williams Reaches Fresh 52-Week High - Analyst Blog

Shares of Sherwin-WilliamsSHW scaled a new 52-week high of $292.46 last Friday before retracing to end the day at $290.65.

The Ohio-based paint giant, which has a market cap of roughly $27 billion, has delivered a one-year return of roughly 54%, much higher than the S&P 500's corresponding return of around 17%. Average volume of shares traded over the last three months is roughly 653.5K. The company's long-term projected earnings per share growth is around 14.2%.

Driving Factors

Sherwin-Williams is gaining from continued strength in its paint business, strategic investments and acquisitions. 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 buyout has enabled it to better serve its customers across some of its key markets.

Sherwin-Williams also continues to invest in its Paint Stores Group segment to boost market share. The company added 95 stores during 2014 in this division and plans are in place to add 100 to 110 stores this year. It sees encouraging demand trends for paints and coatings in the domestic market in 2015.

The company has also launched its HGTV HOME Paints at Lowe's personal stores. Given that Lowe's is well recognized by homeowners in the global home remodeling space, the collaboration with Lowe's should prove beneficial for Sherwin-Williams' HGTV HOME solutions.

Moreover, Sherwin-Williams' aggressive cost control initiatives, working capital reductions, supply chain optimization and productivity improvement are expected to continue to yield margin benefits.

Sherwin-Williams also remains committed to deliver incremental returns to shareholders leveraging healthy cash flows. The company, in Feb 2015, bumped up its quarterly dividend by 22% to 67 cents per share ($2.68 per share annualized) from the previous payout of 55 cents per share. It returned over $1.7 billion to its shareholders last year through dividends and share repurchases.

Sherwin-Williams, a Zacks Rank #2 (Buy) stock, will report its first-quarter 2015 results ahead of the bell on Apr 16. Analysts polled by Zacks are currently expecting earnings of $1.43 per share for the quarter on an average, representing an estimated 25.24% year over year rise.

Other Stocks to Consider

Other companies in the basic materials space worth considering include Innospec Inc. IOSP , RPM International Inc. RPM and Marrone Bio Innovations, Inc. MBII . While Innospec holds a Zacks Rank #1 (Strong Buy), both RPM International and Marrone Bio carry 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 Nasdaq, Inc.

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

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