Company Description

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, Ohio.

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 $0.52 estimate.

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.

Topline Increases

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 mature industry.

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.

Estimates Increase

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 2013.

Valuation

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 industry average.

The Chart

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 for Zacks.com.

This Week's Aggressive Growth Zacks Rank Buy Stocks

Churchill Downs (CHDN) is a Zacks #1 Rank (Strong Buy) due to four straight positive earnings surprises and rising estimates. Derby day is May 5, 2012 and getting in ahead of the other horses could help you get to the finish line first.

Read Full Article.

On Assignment (ASGN) is a Zacks #1 Rank (Strong Buy) and has seven consecutive positive earnings surprises and higher earnings estimates.

Read Full Article.

Fisher Communications (FSCI) is a Zacks #1 Rank (Strong Buy) after making a sustained move into profitability. Strong EPS beats and higher estimates make this stock attractive to aggressive growth investors.

Read Full Article.

Wabash National (WNC) is a Zacks #1 Rank (Strong Buy) due to higher earnings estimates and a solid beat in the most recent quarter.

Read Full Article.