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Sherwin-Williams

SHW

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Shares of The Sherwin-Williams Company (SHW - Analyst Report) moved higher after the paint maker released strong first quarter 2012 results, which included a 51% year-over-year jump in earnings. This Zacks #1 Rank (Strong Buy) stock is nearing the high-end of its 52-week range and showing strong momentum.

Upbeat Financial Results

On April 19, The Sherwin-Williams Company reported first-quarter 2012 earnings per share of 95 cents, surpassing the year-ago earnings of 63 cents attributable to a 15% increase in net sales and a 3% decline in shares outstanding. It also topped the Zacks Consensus Estimate of 94 cents.

Net sales were driven by higher paint sales volume and selling price increases. Sales for the Paint Stores Group soared 21% in the quarter. Five new paint stores were added, bringing the total to around 3,455 stores existing in the quarter.

Bright Guidance

Based on its first quarter results, the company looks forward to a healthy performance in the second quarter as well. It expects second quarter earnings between $1.92 and $2.07.

Earnings guidance for 2012 has increased to $5.75-$6.05 from the earlier expectation of $5.37-$5.67.

Estimates Moving Higher

In the last 30 days, two of the 11 estimates moved higher, pushing the Zacks Consensus Estimate for 2012 up by 1% to $6.13. A similar trend followed for 2013, with earnings per share settling 1% higher at $7.34.

Valuation & Technicals

The Sherwin-Williams Company is currently trading at a forward P/E multiple of 20.94x, compared with the peer group average of 22.98x. Also, with respect to ROE, the valuation looks reasonable. Currently, the company has a trailing 12-month ROE of 38.4% versus the peer group average of negative 5.1%.

The chart below shows the company’s impressive performance over the last 6 months with share prices trading within the $80-$130 per share range.

Headquartered in Cleveland, Ohio, The Sherwin-Williams Company was incorporated in 1866. The company primarily deals with the manufacturing and selling of coatings and related products.

Products are sold to the company’s professional, industrial, commercial, and retail customers through 4000 plus stores in over 109 countries across the world. As of December 2011, the company employed about 32,988 people.

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