Shares of The Sherwin-Williams Company (SHW - Free Report) scaled a fresh 52-week high of $598.25 on Jan 21, before closing the session at $593.06.
The company has a market cap of around $54.7 billion. Average volume of shares traded in the past three months was around 480.9K. The company has an expected long-term earnings per share (EPS) growth rate of 11.9%.
The stock has surged 50.8% in the past year compared with the industry’s 48.9% rally.
What’s Driving Sherwin-Williams?
Upbeat view, strong demand in domestic market and synergies of Valspar acquisition are major factors driving the company.
In October 2019, Sherwin-Williams stated that it expects low single digit percentage increase in net sales for 2019 on a year-over-year basis. The company expects EPS in the range of $17.07-$17.47 for 2019 compared with $11.67 in 2018. It also raised its adjusted EPS guidance for 2019 to the range of $20.90-$21.30.
Sherwin-Williams is seeing strong demand in its domestic end-use markets and remains committed to retail operation expansion. It is focused on capturing a larger share of its end-markets.
The company is also benefiting from consistent strength in architectural paint markets in North America. Its third-quarter sales were driven by increased paint sales volume in North American stores and higher selling prices, which more than offset weak demand across certain end-markets outside the United States.
Moreover, the company is gaining from synergies of the Valspar acquisition. The company expects to end 2019 at annual run rate synergies of around $415 million.
The company’s cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are also supporting its margins.
Zacks Rank & Key Picks
Sherwin-Williams currently carries a Zacks Rank #3 (Hold).
Few better-ranked stocks in the basic materials space are Daqo New Energy Corp (DQ - Free Report) , Royal Gold, Inc (RGLD - Free Report) and Bunge Limited (BG - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Daqo New Energy has projected earnings growth rate of 326.3% for 2020. The company’s shares have surged 77.5% in the past year.
Royal Gold has an estimated earnings growth rate of 83.5% for fiscal 2020. Its shares have returned 39.6% in the past year.
Bunge has an expected earnings growth rate of 30.7% for 2020. The company’s shares have gained 7.1% in the past year.
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