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Sherwin-Williams (SHW) Hits 52-Week High: What's Driving It?

Zacks Equity Research

Shares of The Sherwin-Williams Company SHW scaled a fresh 52-week high of $550.73 on Sep 19, before closing the session at $549.78.

The company has a market cap of roughly $50.7 billion. Average volume of shares traded in the past three months was around 495.5K. The company has expected long-term earnings per share (EPS) growth rate of 12.1%.  

The stock has surged 39.7% in the past year compared with the industry’s 34.5% rally.

What’s Driving SHW?

Upbeat prospects for 2019 are contributing to the gain in Sherwin-Williams' shares.

The company has backed adjusted EPS guidance for 2019 in the range of $20.40-$21.40. For 2019, it projects 2-4% year over year increase in net sales. The company is optimistic about North American stores volumes in the second half of 2019.

Also, earnings estimates for Sherwin-Williams for 2019 have moved up in the past two months. Over this period, the Zacks Consensus Estimate for 2019 has inched up nearly 0.2% to $21.12. The Zacks Consensus Estimate for earnings for 2019 reflects expected year-over-year growth of around 14%.

Sherwin-Williams is gaining from its focus on growth through expansion of operations, its productivity improvement initiatives and synergies of the Valspar acquisition. Moreover, it is witnessing favorable demand in its domestic end-use markets and is committed to expand retail operations.

The company’s cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are also yielding margin benefits. It is also undertaking appropriate pricing actions, which is supporting margins.

The company is gaining from significant synergies of the Valspar acquisition. It expects incremental synergies of roughly $70-$80 million in 2019, with total annual run rate of around $415 million at the end of the year.

The Sherwin-Williams Company Price and Consensus


The Sherwin-Williams Company Price and Consensus

The Sherwin-Williams Company price-consensus-chart | The Sherwin-Williams Company Quote


Zacks Rank & Key Picks

Sherwin-Williams currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, Alamos Gold Inc AGI and Arconic Inc ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 160% for 2019. The company’s shares have surged 70.9% in the past year.

Alamos Gold has projected earnings growth rate of 320% for the current year. The company’s shares have rallied 38.4% in a year’s time.

Arconic has an estimated earnings growth rate of 50% for the current year. Its shares have moved up 18.6% in the past year.

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