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Sherwin-Williams (SHW) Hits 52-Week High: What's Driving It?

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Shares of The Sherwin-Williams Company (SHW - Free Report) scaled a fresh 52-week high of $661.23 on Aug 11, before closing the session at $652.40.

The company has a market cap of around $59.4 billion. Average volume of shares traded in the past three months was around 522.5K. The company has an expected long-term earnings per share (EPS) growth rate of 9.2%.

The stock has gained 24% in the past year compared with the industry’s 23.5% rise.

What’s Driving Sherwin-Williams?

Solid second-quarter performance, upbeat view and strong demand in domestic market are major factors driving the company’s shares.

Sherwin-Williams’ earnings (as reported) rose 29% year over year to $6.48 per share in second-quarter 2020. Adjusted earnings of $7.10 per share also topped the Zacks Consensus Estimate of $5.69.

The company expects demand to improve sequentially in the third quarter with softness persisting in certain end markets in the United States and global environments through 2020.  

It also raised net income per share guidance for full-year 2020 to $19.21-$20.71 from its prior view of $16.46-$18.46.

Sherwin-Williams is seeing strong demand in its domestic end-use markets and remains committed to expand its retail operations. In the second quarter, it witnessed higher demand for architectural DIY (Do It Yourself) paint in North America. The company is benefiting from sustained strength in architectural paint markets in North America.

Moreover, Sherwin-Williams is focused on capturing a larger share of its end-markets, as reflected by an increasing number of retail stores. The company plans to open around 50 new stores in 2020.

Moreover, the company is gaining from synergies of the Valspar acquisition. Its cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are also supporting margins.

Zacks Rank & Other Key Picks

Sherwin-Williams currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space include Equinox Gold Corp. (EQX - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Golden Star Resources Ltd. , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Equinox Gold has an expected earnings growth rate of 255.2% for 2020. The company’s shares have surged 96.3% in the past year.

Eldorado Gold has an expected earnings growth rate of 2,225% for 2020. Its shares have returned 34.8% in the past year.

Golden Star Resources has an expected earnings growth rate of 6.3% for 2020. The company’s shares have surged 49.8% in the past year.

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