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The Sherwin-Williams Company's (SHW - Free Report) shares have rallied 16% year to date, outperforming its industry’s rise of 14.1% over the same time frame.
Let’s take a look at the factors that are driving this Zacks Rank #3 (Hold) stock.
Image Source: Zacks Investment Research
Sherwin-Williams is benefiting from strong momentum in its Paint Stores Group segment, pricing and cost-management actions and expansion of operations.
The company is extending its retail operations in response to strong domestic demand. Auto refinishing demand is stable, with sales increasing by a mid-single-digit percentage in the latest reported quarter.
Sherwin-Williams is committed to expanding its retail footprint in order to obtain market share. Paint Stores Group sales increased 3.6% in the third quarter due to consistent effective pricing. The segment margin increased by 420 basis points to 25.9%. Paint Stores Group added 36 net new stores in the first nine months of 2023, including 16 in the third quarter.
The company focuses on boosting earnings by decreasing costs, increasing productivity, and improving supply chain efficiency. Cost-cutting strategies considerable net cash flows of approximately $1.9 billion in 2022. Strong cash generation also enabled the company to return $1.41 billion to shareholders in dividends and share repurchases in the first nine months of 2023.
The Performance Coatings Group, the Consumer Brands Group and corporate operations are the focus areas of SHW’s restructuring efforts. These activities are predicted to save $50 million to $70 million per year, with 75% of the benefits expected by the end of 2023 and a full run rate by the end of 2024.
Earnings estimates for SHW rose in the past two months, implying analysts' optimism. The consensus estimate for current-year earnings has been up 17.1%. Over the same time period, the consensus estimate for 2024 has also been raised by approximately 9.3%.
Better-ranked stocks in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and The Andersons Inc. (ANDE - Free Report) .
Denison Mines has a projected earnings growth rate of 100% for the current year. It currently carries a Zacks Rank #1 (Strong Buy). DNN delivered a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 63.5% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axalta has a projected earnings growth rate of 5.4% for the current year. It currently carries a Zacks Rank #1. AXTA delivered a trailing four-quarter earnings surprise of roughly 6.7%, on average. The stock is up around 22.2% in a year.
Andersons currently carries a Zacks Rank #2. The stock has gained roughly 44% in the past year. ANDE beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, 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 16% year to date, outperforming its industry’s rise of 14.1% over the same time frame.
Let’s take a look at the factors that are driving this Zacks Rank #3 (Hold) stock.
Image Source: Zacks Investment Research
Sherwin-Williams is benefiting from strong momentum in its Paint Stores Group segment, pricing and cost-management actions and expansion of operations.
The company is extending its retail operations in response to strong domestic demand. Auto refinishing demand is stable, with sales increasing by a mid-single-digit percentage in the latest reported quarter.
Sherwin-Williams is committed to expanding its retail footprint in order to obtain market share. Paint Stores Group sales increased 3.6% in the third quarter due to consistent effective pricing. The segment margin increased by 420 basis points to 25.9%. Paint Stores Group added 36 net new stores in the first nine months of 2023, including 16 in the third quarter.
The company focuses on boosting earnings by decreasing costs, increasing productivity, and improving supply chain efficiency. Cost-cutting strategies considerable net cash flows of approximately $1.9 billion in 2022. Strong cash generation also enabled the company to return $1.41 billion to shareholders in dividends and share repurchases in the first nine months of 2023.
The Performance Coatings Group, the Consumer Brands Group and corporate operations are the focus areas of SHW’s restructuring efforts. These activities are predicted to save $50 million to $70 million per year, with 75% of the benefits expected by the end of 2023 and a full run rate by the end of 2024.
Earnings estimates for SHW rose in the past two months, implying analysts' optimism. The consensus estimate for current-year earnings has been up 17.1%. Over the same time period, the consensus estimate for 2024 has also been raised by approximately 9.3%.
The Sherwin-Williams Company Price and Consensus
The Sherwin-Williams Company price-consensus-chart | The Sherwin-Williams Company Quote
Key Picks
Better-ranked stocks in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and The Andersons Inc. (ANDE - Free Report) .
Denison Mines has a projected earnings growth rate of 100% for the current year. It currently carries a Zacks Rank #1 (Strong Buy). DNN delivered a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 63.5% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axalta has a projected earnings growth rate of 5.4% for the current year. It currently carries a Zacks Rank #1. AXTA delivered a trailing four-quarter earnings surprise of roughly 6.7%, on average. The stock is up around 22.2% in a year.
Andersons currently carries a Zacks Rank #2. The stock has gained roughly 44% in the past year. ANDE beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average.