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Sherwin-Williams Plans to Build Headquarters and R&D Center

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The Sherwin-Williams Company (SHW - Free Report) announced plans to finalize the construction of a global headquarters in downtown Cleveland and a new R&D facility in the Cleveland suburb of Brecksville.

The proposals follow a rigorous competitive selection process for the site. Notably, the plans are conditional upon the completion of the standard due diligence; acceptance of incentives as well as other issues at the state, county and city levels; and resolution of business and legal issues that surround such major investment projects in real estate. Notably, the company’s current headquarters building is no longer conducive to meet its future needs.

The large planned investment represents its trust in the sustained strength of Cleveland and Northeast Ohio, its people, and the capacity of public partners to fulfill their commitments. Further, it aids long-term growth, improves customers’ service capacity, advances talent retention and attraction, and demonstrates the company's commitment to the region.

Preliminary plans state that Sherwin-Williams needs to spend at least $600 million for the development of both facilities. Notably, both facilities are expected to house more than 3,500 staff, with space for substantial future growth. The company anticipates that over time, it would create at least 400 employments at these plants, suggesting an 11% increase to its current local workforce. The transition to the new faculties is anticipated to take place no later than 2023.

Shares of Sherwin-Williams have rallied 35% in the past year compared with the industry’s 35.3% rise.

 

 

In January, the company reported adjusted earnings per share of $4.27 for fourth-quarter 2019, which missed the Zacks Consensus Estimate of $4.40.

Net sales inched up 1.2% year over year to $4,114.4 million. However, it missed the Zacks Consensus Estimate of $4,185.5 million.

Heading into 2020, the company stated that North American architectural demand is strong and industrial demand remains variable in terms of geography and end markets.

For first-quarter 2020, Sherwin-Williams projects 2-5% rise in net sales from the year-ago reported figure.

For 2020, the company expects 2-4% increase in net sales from 2019 levels. Based on the projection, it expects earnings per share of $19.91-$20.71 for 2020, which indicates a rise from $16.49 reported in 2019.

The Sherwin-Williams Company Price and Consensus

 

Zacks Rank & Stocks to Consider

Sherwin-Williams currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp. (DQ - Free Report) , Royal Gold, Inc. (RGLD - Free Report) and Commercial Metals Company (CMC - Free Report) .

Daqo New Energy has a projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied 74.2% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Royal Gold has an estimated earnings growth rate of 79.3% for fiscal 2020. It currently flaunts a Zacks Rank #1. The company’s shares have rallied 23.7% in a year.

Commercial Metals has a Zacks Rank #2 (Buy) and a projected earnings growth rate of 20.2% for 2020. The company’s shares have rallied 36.4% in a year.

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