Sherwin-Williams (SHW) Shares Up 13% in 3 Months: Here's Why
The Sherwin-Williams Company’s SHW shares have gained 12.9% over the past three months. The stock has outperformed its industry’s rise of 8.4% over the same time frame. The paints and coatings giant has also topped the S&P 500’s 11.3% rise over the same period.
Let’s take a look into the factors behind the stock’s price appreciation.
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Strength in Paint Stores, Cost Actions Drive SHW
Sherwin-Williams, a Zacks Rank #3 (Hold) stock, is gaining from strong momentum in its Paint Stores Group segment, pricing and cost-management actions and expansion of operations.
The company is witnessing strength in North American professional architectural end markets. It is seeing higher architectural sales volumes in the Paint Stores Group segment. Net sales from this segment climbed nearly 15% year over year in the first quarter of 2023 driven by a rise in sales volume in all end markets and higher selling prices. The momentum in this segment is likely to continue in the second quarter on higher architectural demand.
Sherwin-Williams’ cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are providing margin benefits. It is also implementing pricing actions to offset cost inflation, especially in raw materials.
The company is focusing on cost reductions through restructuring, which is expected to provide benefits in 2023. It expects to realize approximately $50-$70 million in estimated annual savings, 75% of which are expected to be realized by the end of 2023.
Moreover, SHW remains committed toward expanding its retail operations. It is focused on capturing a larger share of its end-markets, as is evident from increasing number of retail stores.
The Sherwin-Williams Company Price and Consensus
The Sherwin-Williams Company price-consensus-chart | The Sherwin-Williams Company Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include L.B. Foster Company FSTR, Gold Fields Limited GFI, and Linde plc LIN.
L.B. Foster currently carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for FSTR's current-year earnings has been stable over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
L.B. Foster’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 140.5%, on average. FSTR has gained around 12% in a year.
Gold Fields currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for GFI’s current-year earnings has been revised 4% upward in the past 60 days.
The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, reflecting an expected year-over-year growth of 8.3%. Gold Fields’ shares have popped roughly 66% in the past year.
Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 4.4% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. LIN’s shares have gained roughly 23% in the past year.
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The Sherwin-Williams Company (SHW) : Free Stock Analysis Report
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