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The Sherwin-Williams Company's (SHW - Free Report) shares have rallied 15.8% year to date, outperforming its industry’s rise of 13.4% over the same time frame.
Let’s take a look at the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
Image Source: Zacks Investment Research
Sherwin-Williams is expanding its retail operation by taking advantage of the strong domestic demand. It is seeing high demand in auto refinishing. The company's system installations in North America have increased by double digits this year, which is encouraging for future sales.
Sherwin-Williams' remains committed to expanding its retail footprint to increase its market share. The Paint Stores Group experienced a 10% sales rise in the second quarter as a result of improved pricing and volume increases across numerous geographies. Segment margin increased 280 basis points to 24.3%
The company continually seeks to boost margins through cost-cutting, supply chain efficiency and productivity enhancements. Cost-cutting strategies produced large net cash flows of about $1.9 billion in 2022. Significant shareholder returns totaling $848.7 million in dividends and share repurchases during the first half of 2023 were made attainable by strong cash generation.
In addition, there are ongoing restructuring activities, particularly in corporate operations, the Performance Coatings Group and the Consumer Brands Group. Savings of $50 million to $70 million annually are expected from these efforts, with 75% of the benefits anticipated by the end of 2023 and a full run rate by the end of 2024.
Also, earnings estimates for SHW have been going up over the past two months, reflecting analysts’ optimism. The Zacks Consensus Estimate for current-year earnings has been revised upward by 12.4%. The consensus estimate for 2024 has also been revised roughly 8.5% upward over the same time frame.
For full-year 2023, the Zacks Consensus Estimate for earnings currently stands at $9.78 per share, implying year-over-year growth of 12%. For 2024, earnings are anticipated to experience growth of 11.5%.
Other top-ranked stocks in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Denison Mine Corp. (DNN - Free Report) and Veritiv Corporation .
Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). The stock has rallied roughly 98.5% in the past year. CRS beat the Zacks Consensus Estimate in three of the last four quarters while meeting in one. It delivered a trailing four-quarter earnings surprise of 9.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Denison Mines currently carries a Zacks Rank #1. The stock has gained roughly 6% in the past year. DNN beat the Zacks Consensus Estimate in three of the last four quarters while meeting once. It delivered a trailing four-quarter earnings surprise of 75%, on average.
Veritiv currently carries a Zacks Rank #2 (Buy). The stock has rallied roughly 39.1% in the past year. VRTV beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6%, on average.
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Sherwin-Williams' (SHW) Shares Jump 16% YTD: Here's Why
The Sherwin-Williams Company's (SHW - Free Report) shares have rallied 15.8% year to date, outperforming its industry’s rise of 13.4% over the same time frame.
Let’s take a look at the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
Image Source: Zacks Investment Research
Sherwin-Williams is expanding its retail operation by taking advantage of the strong domestic demand. It is seeing high demand in auto refinishing. The company's system installations in North America have increased by double digits this year, which is encouraging for future sales.
Sherwin-Williams' remains committed to expanding its retail footprint to increase its market share. The Paint Stores Group experienced a 10% sales rise in the second quarter as a result of improved pricing and volume increases across numerous geographies. Segment margin increased 280 basis points to 24.3%
The company continually seeks to boost margins through cost-cutting, supply chain efficiency and productivity enhancements. Cost-cutting strategies produced large net cash flows of about $1.9 billion in 2022. Significant shareholder returns totaling $848.7 million in dividends and share repurchases during the first half of 2023 were made attainable by strong cash generation.
In addition, there are ongoing restructuring activities, particularly in corporate operations, the Performance Coatings Group and the Consumer Brands Group. Savings of $50 million to $70 million annually are expected from these efforts, with 75% of the benefits anticipated by the end of 2023 and a full run rate by the end of 2024.
Also, earnings estimates for SHW have been going up over the past two months, reflecting analysts’ optimism. The Zacks Consensus Estimate for current-year earnings has been revised upward by 12.4%. The consensus estimate for 2024 has also been revised roughly 8.5% upward over the same time frame.
For full-year 2023, the Zacks Consensus Estimate for earnings currently stands at $9.78 per share, implying year-over-year growth of 12%. For 2024, earnings are anticipated to experience growth of 11.5%.
The Sherwin-Williams Company Price and Consensus
The Sherwin-Williams Company price-consensus-chart | The Sherwin-Williams Company Quote
Other Key Picks
Other top-ranked stocks in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Denison Mine Corp. (DNN - Free Report) and Veritiv Corporation .
Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). The stock has rallied roughly 98.5% in the past year. CRS beat the Zacks Consensus Estimate in three of the last four quarters while meeting in one. It delivered a trailing four-quarter earnings surprise of 9.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Denison Mines currently carries a Zacks Rank #1. The stock has gained roughly 6% in the past year. DNN beat the Zacks Consensus Estimate in three of the last four quarters while meeting once. It delivered a trailing four-quarter earnings surprise of 75%, on average.
Veritiv currently carries a Zacks Rank #2 (Buy). The stock has rallied roughly 39.1% in the past year. VRTV beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6%, on average.