Sherwin-Williams (SHW) Up 18% in 6 Months: What's Driving it?
The Sherwin-Williams Company's SHW shares have rallied 18.4% over the past six months, outperforming its industry’s rise of 16.3% over the same time frame.
Let’s take a look at the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
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Sherwin-Williams is growing its retail business by taking advantage of the robust domestic demand. In auto refinishing, it is witnessing high demand. This year, the company saw a double-digit rise in system installs in North America, which is promising for upcoming sales.
Sherwin-Williams remains dedicated to growing its retail presence to gain market share. Due to better pricing and volume gains across several geographies, The Paint Stores Group witnessed a 10% increase in sales in the second quarter. Segment margin went up 280 basis points to 24.3%.
The company continues to seek ways to increase profits through cost-cutting, higher productivity and improved supply chain efficiency. In 2022, cost-cutting measures generated significant net cash flows of around $1.9 billion. Strong cash generation enabled significant shareholder payouts of $848.7 million in dividends and share repurchases during the first half of 2023.
Moreover, the Performance Coatings Group, the Consumer Brands Group and corporate operations are among the areas that are undergoing restructuring. These initiatives are expected to result in yearly savings of $50 million to $70 million, with 75% of the benefits projected by the end of 2023 and a full run rate by the end of 2024.
Also, earnings estimates for SHW have been going up over the past two months, reflecting analysts’ optimism. The Zacks Consensus Estimate for current-year earnings has been revised upward by 12%. The consensus estimate for 2024 has also been raised roughly 11.5% over the same time frame.
The Sherwin-Williams Company Price and Consensus
The Sherwin-Williams Company price-consensus-chart | The Sherwin-Williams Company Quote
Other Key Picks
Other top-ranked stocks in the basic materials space include Carpenter Technology Corporation CRS, The Andersons Inc. ANDE and Veritiv Corporation VRTV.
Carpenter Technology currently carries a Zacks Rank #1. CRS shares have rallied roughly 59.4% in the past year. CRS beat the Zacks Consensus Estimate in three of the last four quarters while meeting once. It delivered a trailing four-quarter earnings surprise of 9.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Andersons currently carries a Zacks Rank #1. Anderson’s shares have gained roughly 42.8% 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.
Veritiv currently carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 37.1% in the past year. VRTV beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6%, on average.
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