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Sherwin-Williams Hits New 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 $433.90 on Jan 12, before eventually closing the day at $432.84.

Sherwin-Williams has a market cap of roughly $40.5 billion. Average volume of shares traded in the last three months is around 457.1K. The company has an expected long-term EPS growth of 11.6%.

Shares of Sherwin-Williams have moved up 12.7% in the last three months, outperforming the industry’s 11.1% gain.

 



Driving Factors

Upbeat prospects stemming from the Valspar buyout are contributing to a rally in Sherwin-Williams' shares. Sherwin-Williams, during its third-quarter call, noted that the Valspar integration plans and synergy progress is in line with its expectations, as the company remains focused on strengthening performance of core businesses and newly acquired businesses. The company has also implemented appropriate pricing actions to offset the impact of increasing raw material costs.

The company projects mid-to-high single digit percentage increase in net sales, year over year for the fourth quarter of 2017. Sherwin-Williams expects earnings per share in the fourth quarter in the range of $1.97-$2.27, compared with $2.15 earned a year ago.

Sherwin-Williams’ aggressive cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are likely to continue to improve the margin. Working capital management and efforts to cut operating costs are also helping the company to generate healthy cash flows.

The Valspar acquisition also enables Sherwin-Williams to strengthen its position as a leading paints and coatings provider globally, leveraging highly complementary offerings, strong brands and technologies. The buyout extends Sherwin-Williams’ brand portfolio and customer relationships in North America and bolster its global finish business. Sherwin-Williams should gain from significant synergies of the Valspar acquisition.

 

Zacks Rank & Other Stocks to Consider

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

Some other top-ranked stocks in the basic materials space are Huntsman Corporation (HUN - Free Report) , Daqo New Energy Corp. (DQ - Free Report) and Kronos Worldwide Inc. (KRO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman has an expected long-term earnings growth rate of 8%. Its shares have soared 71.4% over a year.

Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have rallied a whopping 219.9% over a year.

Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have surged 115.4% in the last year.

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