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Sherwin-Williams (SHW) Up 18% in 6 Months: What's Driving it?
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The Sherwin-Williams Company's (SHW - Free Report) shares have rallied 17.9% in the past six months, modestly outperforming its industry’s growth of 17.6% over the same period. The company has topped the S&P 500’s roughly 6.6% rise over the same period.
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, as well as pricing and cost-cutting actions and operational expansion. In response to strong domestic demand, the company is expanding its retail operations. The demand for auto refinishing is stable, with sales increasing by a mid-single-digit percentage in the third quarter of 2023.
Sherwin-Williams is increasing its retail presence in order to gain market share. Due to consistent effective pricing, Paint Stores Group sales increased 3.6% in the third quarter. The segment’s margin increased by 420 basis points to 25.9%. In the first nine months of 2023, Paint Stores Group added 36 net new stores, including 16 in the third quarter.
The company aims to increase profits by lowering costs, increasing productivity and improving supply chain efficiency. In 2022, cost-cutting strategies will generate significant net cash flows of approximately $1.9 billion. In the first nine months of 2023, the company returned $1.41 billion to shareholders in dividends and share repurchases, leveraging strong cash generation.
SHW's restructuring efforts are focused on the Performance Coatings Group, the Consumer Brands Group and corporate operations. These activities are expected to save between $50 million and $70 million per year, with 75% of the benefits expected by 2023-end and a total run rate by the end of 2024.
SHW’s earnings estimates have risen in the last two months, indicating analyst optimism. The consensus estimate for 2023 earnings has risen 17.1%. During the same period, the consensus estimate for 2024 increased by 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 projected an earnings growth rate of 100% for 2023. It currently sports a Zacks Rank #1 (Strong Buy). DNN delivered a trailing four-quarter earnings surprise of 225%, on average. The stock increased by 63.7% 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 sports a Zacks Rank #1. AXTA delivered a trailing four-quarter earnings surprise of 6.7%, on average. The stock is up around 23.1% in a year.
Andersons currently carries a Zacks Rank #2 (Buy). The stock gained 45% 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) Up 18% in 6 Months: What's Driving it?
The Sherwin-Williams Company's (SHW - Free Report) shares have rallied 17.9% in the past six months, modestly outperforming its industry’s growth of 17.6% over the same period. The company has topped the S&P 500’s roughly 6.6% rise over the same period.
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, as well as pricing and cost-cutting actions and operational expansion. In response to strong domestic demand, the company is expanding its retail operations. The demand for auto refinishing is stable, with sales increasing by a mid-single-digit percentage in the third quarter of 2023.
Sherwin-Williams is increasing its retail presence in order to gain market share. Due to consistent effective pricing, Paint Stores Group sales increased 3.6% in the third quarter. The segment’s margin increased by 420 basis points to 25.9%. In the first nine months of 2023, Paint Stores Group added 36 net new stores, including 16 in the third quarter.
The company aims to increase profits by lowering costs, increasing productivity and improving supply chain efficiency. In 2022, cost-cutting strategies will generate significant net cash flows of approximately $1.9 billion. In the first nine months of 2023, the company returned $1.41 billion to shareholders in dividends and share repurchases, leveraging strong cash generation.
SHW's restructuring efforts are focused on the Performance Coatings Group, the Consumer Brands Group and corporate operations. These activities are expected to save between $50 million and $70 million per year, with 75% of the benefits expected by 2023-end and a total run rate by the end of 2024.
SHW’s earnings estimates have risen in the last two months, indicating analyst optimism. The consensus estimate for 2023 earnings has risen 17.1%. During the same period, the consensus estimate for 2024 increased by 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 projected an earnings growth rate of 100% for 2023. It currently sports a Zacks Rank #1 (Strong Buy). DNN delivered a trailing four-quarter earnings surprise of 225%, on average. The stock increased by 63.7% 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 sports a Zacks Rank #1. AXTA delivered a trailing four-quarter earnings surprise of 6.7%, on average. The stock is up around 23.1% in a year.
Andersons currently carries a Zacks Rank #2 (Buy). The stock gained 45% 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.