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4 Reasons to Add Sherwin-Williams (SHW) to Your Portfolio Now
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The Sherwin-Williams Company’s (SHW - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make this paints giant an intriguing choice for investors right now.
What’s Working in Favor of SHW?
An Outperformer: Sherwin-Williams, a Zacks Rank #2 (Buy) stock, has outperformed the industry it belongs to over a year, partly driven by upbeat prospects stemming from its acquisition of Valspar. The company’s shares have gained around 23.8% over this period, compared with roughly 19.3% gain recorded by the industry.
Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Sherwin-Williams is currently pegged at $19.09, reflecting an expected year-over-year growth of 33.8%. Moreover, earnings are expected to register a 13.7% growth in 2019. The company also has an expected long-term earnings per share growth of 11.7%, higher than the industry average of 10.3%.
Superior Return on Equity (ROE): Sherwin-Williams’ ROE of 50.6%, as compared with the industry average of 39.4%, manifests the company’s efficiency in utilizing shareholder’s funds.
Upbeat Outlook: Sherwin-Williams, in its fourth-quarter 2017 call, said that it sees mid-to-high single digit percentage increase in net sales year over year for first-quarter 2018. It also sees incremental sales from Valspar acquisition to be roughly $1 billion in the first quarter.
For 2018, Sherwin-Williams expects mid-to-high single digit percentage increase in net sales from 2017. It also sees incremental sales from the Valspar buyout to be roughly $1.6 billion for the first five months of the year.
The Valspar acquisition has enabled Sherwin-Williams to strengthen its position as a leading paints and coatings provider globally, leveraging highly complementary offerings, strong brands and technologies. The buyout extends Sherwin-Williams’ brand portfolio and customer relationships in North America and bolster its global finish business. Sherwin-Williams should gain from significant synergies of the acquisition. The company expects to achieve $320 million in annual run-rate synergies by the end of 2018.
Moreover, Sherwin-Williams’ aggressive cost control initiatives, working capital reductions, supply chain optimization and productivity improvement should continue to yield margin benefits. Working capital management and efforts to cut operating costs are also helping the company to generate healthy cash flows. The company generated strong cash flows from operations of around $1.9 billion in 2017.
Sherwin-Williams also remains focused on capturing a larger share of its end-markets. The company added around 100 net new stores in 2017 in its Americas Group unit, and plans are in place to add 100-110 net new stores in 2018.
Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Kronos sports a Zacks Rank #1 (Strong Buy) and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 34% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
LyondellBasell carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 9%. Its shares have gained around 15% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 28% over a year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
4 Reasons to Add Sherwin-Williams (SHW) to Your Portfolio Now
The Sherwin-Williams Company’s (SHW - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make this paints giant an intriguing choice for investors right now.
What’s Working in Favor of SHW?
An Outperformer: Sherwin-Williams, a Zacks Rank #2 (Buy) stock, has outperformed the industry it belongs to over a year, partly driven by upbeat prospects stemming from its acquisition of Valspar. The company’s shares have gained around 23.8% over this period, compared with roughly 19.3% gain recorded by the industry.
Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Sherwin-Williams is currently pegged at $19.09, reflecting an expected year-over-year growth of 33.8%. Moreover, earnings are expected to register a 13.7% growth in 2019. The company also has an expected long-term earnings per share growth of 11.7%, higher than the industry average of 10.3%.
Superior Return on Equity (ROE): Sherwin-Williams’ ROE of 50.6%, as compared with the industry average of 39.4%, manifests the company’s efficiency in utilizing shareholder’s funds.
Upbeat Outlook: Sherwin-Williams, in its fourth-quarter 2017 call, said that it sees mid-to-high single digit percentage increase in net sales year over year for first-quarter 2018. It also sees incremental sales from Valspar acquisition to be roughly $1 billion in the first quarter.
For 2018, Sherwin-Williams expects mid-to-high single digit percentage increase in net sales from 2017. It also sees incremental sales from the Valspar buyout to be roughly $1.6 billion for the first five months of the year.
The Valspar acquisition has enabled Sherwin-Williams to strengthen its position as a leading paints and coatings provider globally, leveraging highly complementary offerings, strong brands and technologies. The buyout extends Sherwin-Williams’ brand portfolio and customer relationships in North America and bolster its global finish business. Sherwin-Williams should gain from significant synergies of the acquisition. The company expects to achieve $320 million in annual run-rate synergies by the end of 2018.
Moreover, Sherwin-Williams’ aggressive cost control initiatives, working capital reductions, supply chain optimization and productivity improvement should continue to yield margin benefits. Working capital management and efforts to cut operating costs are also helping the company to generate healthy cash flows. The company generated strong cash flows from operations of around $1.9 billion in 2017.
Sherwin-Williams also remains focused on capturing a larger share of its end-markets. The company added around 100 net new stores in 2017 in its Americas Group unit, and plans are in place to add 100-110 net new stores in 2018.
The Sherwin-Williams Company Price and Consensus
The Sherwin-Williams Company Price and Consensus | The Sherwin-Williams Company Quote
Other Stocks to Consider
Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Kronos sports a Zacks Rank #1 (Strong Buy) and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 34% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
LyondellBasell carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 9%. Its shares have gained around 15% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 28% over a year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>