Sherwin-Williams Hits New 52-Week High On Solid Prospects

Shares of paint giant, Sherwin-Williams (NYSE:SHW) , scaled a new 52-week high of $347.96 yesterday, before pulling back to close the day at $345.97.

Sherwin-Williams has a market capitalization of roughly $32.2 billion. The average volume of shares traded by the company in the past three months is 523.4K.

Sherwin-Williams’ shares rallied around 11% in the past three months on the back of strength in its Paint Stores Group unit. The stock outperformed the Zacks categorized Paints & Allied Products industry’s roughly 8% gain in the said timeframe.

Driving factors

Sherwin-Williams posted a positive earnings surprise of 9.66% in first-quarter of 2017. For the second quarter, Sherwin-Williams expect mid-to-high single digit percentage increase in net sales, year over year. The company also expects earnings in second-quarter 2017 in the range of $4.15–$4.35 per share, including a 25 cents charge from costs associated with the planned acquisition of Valspar.

Sherwin-Williams is benefiting from its cost control initiatives. Moreover, it remains focused on growth through acquisitions and expansion of operations.

The company recently wrapped up its $11.3 billion acquisition of Valspar, creating a premier global paints and coatings company. This followed the approval of the transaction by the U.S. Federal Trade Commission (FTC) and the Canadian Competition Bureau (CCB).

The Valspar acquisition allows Sherwin-Williams to reinforce its position as a leading paints and coatings provider globally leveraging highly complementary offerings, strong brands and technologies.

Valspar is a strategic fit and the merger extends Sherwin-Williams’ brand portfolio and customer relationships in North America and bolster its global finishes business. The buyout also significantly enhances Sherwin-Williams’ competitive profile.

The integrated company with pro-forma annual revenue of $15.8 billion has a prominent market position in architectural paint across North America, South America, China, Australia and the UK. It is also a global leader in packaging coatings, coil coatings, general industrial coatings and industrial wood coatings.

Sherwin-Williams expects to achieve $320 million in annual synergies within three years of the closure of the deal. It also expects the transaction to be immediately accretive to adjusted earnings and to considerably increase its operating cash flow.

Sherwin-Williams Company (The) Price and Consensus

Sherwin-Williams Company (The) Price and Consensus | Sherwin-Williams Company (The) Quote

Zacks Rank & Key Picks

Sherwin-Williams currently sports a Zacks Rank #1 (Strong Buy).

Some other top ranked companies in the basic materials space include The Chemours Company (NYSE:CC) , Huntsman Corporation (NYSE:HUN) and Kronos Worldwide, Inc. (NYSE:KRO) . All the three stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has expected long-term growth rate of 15.5%.

Huntsman has expected long-term growth rate of 7%.

Kronos has expected long-term growth rate of 5%.

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