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Sherwin-Williams (SHW - Analyst Report)
has topped the Zacks Consensus Estimate in five of the last seven
quarters and has seen earnings estimates increase. The stock is a Zacks #2
The Sherwin-Williams Company engages in the development,
manufacture, distribution, and sale of paints, coatings, and
related products worldwide. The Sherwin-Williams Company sells its
products through a network of company-operated stores, direct
sales staff and outside sales representatives. As of December 31,
2011, it operated 3,450 specialty paint stores and 303 branches.
The company was founded in 1866 and is headquartered in Cleveland,
Five of Seven Positive Earnings Surprises
SHW has topped the Zacks Consensus Estimate in five of the last
seven quarters. The largest of the beats came in the March 2011
quarter. The company reported $0.63, $0.11 or 21% more than the
The following quarter saw an earnings miss of an equal amount in
absolute terms but on 6% on a percentage basis. The stock sold
off by 6% following that earnings report.
The last three quarters have seen year over year increases of
sales. The June 2011 quarter had sales come in 10% above the year
ago level, September 2011 was up 14% and December 2011 was higher
by 9%. Tech investors would instatntly sell stocks with growth that low, but this company has been around since 1866. I think 146 years of existence qualifies it as a participant in a
Most Recent Beat
The company reported its December 2011 quarter on January 26
and posted revenue of $2.07 billion, up from $174 million from the
year ago period. Earnings per share of $0.87 were 3.6% ahead of
the Zacks Consensus Estimate and up from $0.72 of EPS in the same
quarter last year.
SHW is seeing analysts increase estimates. In December 2011, the
Zacks Consensus Estimate for 2012 was $5.55 and has since moved to
$5.72. The 2013 estimate moved from $6.21 in December 2011 to the
current level of $6.68. That implies earnings growth of 17% for
The valuation for SHW is very reasonable. A trailing twelve
month PE of 22x is significantly below the industry average of
71x. The forward PE of 19x is also well below the industry
average of 29x. Price to book shows a premium
while price to sales of 1.28x shows a discount to the 1.57x
The chart is just what you would expect to see from a 146 year old
company. Paint over that attempt at a joke and then take a look at
the last six months and you see stock that has just been on the
slow and steady upward trend. This will likely be the oldest
company that I will write on as an aggressive growth stock, but
the chart fits, the surprises are positive, the earnings are
growing and the valuation is reasonable. All these key indicators
show why SHW is a Zacks #2 Rank (Buy).
Brian Bolan is an Aggressive Growth Stock Strategist
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