Did everyone see this:
"Sherwin-Williams Co, the top U.S. paint maker, said it will buy privately held Mexican paint company Consorcio Comex for about $2.34 billion in cash, including debt, to boost its distribution in the Americas."
Current SHW stores number 4,000, so this transactions could easily DOUBLE their SALES and EARNINGS.
This is HUGE for the company.
It gives them a BIG footprint in North America and could lead to more business in fast-growing Latin America.
Why isn't the stock selling for $250, today?
Investors are by and large very stupid animals. However, not even the collective mass of #$%$ can move this crap company to $250. See you at $110 soon. $1 down per day-that's all I ask.
Sentiment: Strong Sell
In regards to your last sentence: Perhaps because it's worth somewhere around $110/share?
Thank you, and the other longs, as I was able to pick up a quick 70% on Nov $150 puts in a matter of minutes earlier today. Appreciate your help!
Sentiment: Strong Sell
This is a great move for the Company. Another footprint south of the border that will lead to higher sales and profits. This acquisition is another reason why you should buy this stock for the long run. It will affect the bottom line for a few years, but the synergies of this acquisition will be huge in the next 3 or 4 years and beyond. I have changed my sentiment from a strong hold or weak buy to a strong buy. This is BIG!!!!
Sentiment: Strong Buy
Sure did. BTW, they did add 5,118 stores in America, they added a few thousand hole in the wall stores in Mexico and paid over 1.5 in sales CASH. Maybe an interesting move if they could have purchased with their bloated stock, but buying at this price in cash is a paying way too much. I wouldn't touch SHW with a ten foot pole at these nosebleed prices. Come down to around 80 and I'll take a look.
They are also getting 16 manufacturing plants:
"Comex currently employs 7,200 people and operates eight manufacturing facilities in Mexico, five in the U.S. and three in Canada."
So, they are expanding production capacity. What would 16 plants cost to build?
The Mexican plants will be lower cost to operate, which raises margins.
Paying $2.34B for maybe $5B of added profitable sales is a really good move, any way that you look at it.
The payback is probably less than 6 years, with an ROI of 20+%.
Whether they use cash or 16 million shares isn't important.
I would prefer that they don't dilute, if they have the cash.
With the added sales, they could earn $10 per share in 2013, before renovation costs.
A 15 forward P/E is hardly "nosebleed prices".
We will never see $80 again.
I predict that the stock will sell for north of $200 in 12 months (up 35%).
Are you short the stock?
The market has a major disagreement with what you are saying. Not often you see the purchaser rising after the announcement of a large purchase. Looks like some irrational exuberance going on here.