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Sherwin-Williams (SHW) to Sell China Architectural Paint Unit
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The Sherwin-Williams Company (SHW - Free Report) has signed a purchase agreement with global coatings manufacturer Akzo Nobel N.V. to divest its China architectural paint business. The business manufactures and sells decorative paints in China under the Huarun brand name. It has annual revenues of about $100 million and employs about 300 people. Subject to customary regulatory approvals, the transaction is likely to close in the second half of 2023.
The architectural paint business was previously reported in the Sherwin-Williams Consumer Brands Group and became part of Sherwin-Williams through the acquisition of The Valspar Corporation in 2017.
According to Sherwin-Williams, the divestiture of the business is in sync with the company's ongoing strategy to optimize its portfolio, brands and customer programs in order to deliver continued value for its shareholders. The company believes its resources can be better allocated to other areas to provide more growth, higher returns and cash flow. SHW is nevertheless determined to expand its industrial coatings business in the region.
Shares of Sherwin-Williams have lost 7.7% over the past year compared with an 7.5% decline of its industry.
Image Source: Zacks Investment Research
On its fourth-quarter earnings call, company said that it expects a challenging demand scenario in 2023. Due to the slowing of the U.S. housing market, the company expects its architectural and some industrial sectors to remain under pressure. Rising inflation is also anticipated to hurt the company's performance. Furthermore, SHW expects weakening economic circumstances in Europe, uncertainty in China due to the pandemic and a slowdown in the United States, as seen in some industries, to have an adverse impact on its industrial business.
It expects consolidated net sales to be flat to fall in a mid-single-digit percentage range year over year for 2023. Sherwin-Williams anticipates full-year earnings of $6.79-$7.59 per share. For 2023, adjusted earnings per share are expected to be within $7.95-$8.65.
Sherwin-Williams currently carries Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the Construction space include Installed Building Products, Inc. (IBP - Free Report) , Altair Engineering Inc. (ALTR - Free Report) and Comfort Systems USA, Inc. (FIX - Free Report) .
Installed Building Products currently carries a Zacks Rank #1 (Strong Buy). Shares of IBP have gained 46.4% in the past year. It delivered a trailing four-quarter earnings surprise of roughly 21.1% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Altair Engineering currently carries a Zacks Rank #1. Shares of ALTR have gained 19.2% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 135.8% on average.
Comfort Systems currently carries a Zacks Rank #1. Shares of FIX have gained 50.5% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 9.9% on average.
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Sherwin-Williams (SHW) to Sell China Architectural Paint Unit
The Sherwin-Williams Company (SHW - Free Report) has signed a purchase agreement with global coatings manufacturer Akzo Nobel N.V. to divest its China architectural paint business. The business manufactures and sells decorative paints in China under the Huarun brand name. It has annual revenues of about $100 million and employs about 300 people. Subject to customary regulatory approvals, the transaction is likely to close in the second half of 2023.
The architectural paint business was previously reported in the Sherwin-Williams Consumer Brands Group and became part of Sherwin-Williams through the acquisition of The Valspar Corporation in 2017.
According to Sherwin-Williams, the divestiture of the business is in sync with the company's ongoing strategy to optimize its portfolio, brands and customer programs in order to deliver continued value for its shareholders. The company believes its resources can be better allocated to other areas to provide more growth, higher returns and cash flow. SHW is nevertheless determined to expand its industrial coatings business in the region.
Shares of Sherwin-Williams have lost 7.7% over the past year compared with an 7.5% decline of its industry.
Image Source: Zacks Investment Research
On its fourth-quarter earnings call, company said that it expects a challenging demand scenario in 2023. Due to the slowing of the U.S. housing market, the company expects its architectural and some industrial sectors to remain under pressure. Rising inflation is also anticipated to hurt the company's performance. Furthermore, SHW expects weakening economic circumstances in Europe, uncertainty in China due to the pandemic and a slowdown in the United States, as seen in some industries, to have an adverse impact on its industrial business.
It expects consolidated net sales to be flat to fall in a mid-single-digit percentage range year over year for 2023. Sherwin-Williams anticipates full-year earnings of $6.79-$7.59 per share. For 2023, adjusted earnings per share are expected to be within $7.95-$8.65.
The Sherwin-Williams Company Price and Consensus
The Sherwin-Williams Company price-consensus-chart | The Sherwin-Williams Company Quote
Zacks Rank & Key Picks
Sherwin-Williams currently carries Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the Construction space include Installed Building Products, Inc. (IBP - Free Report) , Altair Engineering Inc. (ALTR - Free Report) and Comfort Systems USA, Inc. (FIX - Free Report) .
Installed Building Products currently carries a Zacks Rank #1 (Strong Buy). Shares of IBP have gained 46.4% in the past year. It delivered a trailing four-quarter earnings surprise of roughly 21.1% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Altair Engineering currently carries a Zacks Rank #1. Shares of ALTR have gained 19.2% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 135.8% on average.
Comfort Systems currently carries a Zacks Rank #1. Shares of FIX have gained 50.5% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 9.9% on average.