Hot Stock in the Spotlight: The Sherwin-Williams Company (NYSE: SHW)

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CLEVELAND, January 18, 2020 – Shares of The Sherwin-Williams Company (NYSE: SHW) gained 0.19% to $586.08. The stock grabbed the investor’s attention and traded 76.847K shares as compared to its average daily volume of 480.67K shares. The stock’s institutional ownership stands at 80.10%.

The Sherwin-Williams Company (SHW) posted revenues of $4,867.70M, up around 3% year over year. It beat the Zacks Consensus Estimate of $4,819.80M.

Net sales in The Americas Group increased 8.7% to $2.90B in the quarter and increased 5.9% to $7.81B in nine months due primarily to higher paint sales across all end markets in North American stores and selling price increases. Net sales from stores in the U.S. and Canada open for more than twelve calendar months increased 8.1% in the quarter and increased 5.5% in nine months over last year’s comparable periods. Segment profit increased $85.90M to $663.70M in the quarter and increased $122.1M to $1.61B in nine months due primarily to higher paint sales volume and selling price increases. Segment profit as a percent of net sales increased in the quarter to 22.9% from 21.7% in the third quarter last year. In the first nine months, segment profit as a percent of net sales increased to 20.6% compared to 20.1% in the same period last year.

Net sales of the Consumer Brands Group decreased 11.9% to $678.50M in the quarter and decreased 3.0% to $2.14B in nine months. The decrease in the quarter was due primarily to comparisons to load-in sales for a new customer program in 2018, the divestiture of the Guardsman furniture protection business in the third quarter of 2018 and softer sales outside of North America in some end markets, partially offset by selling price increases and higher volume sales to most of the Group’s retail customers.  The decrease in the nine months was due primarily to the divestiture of the Guardsman furniture protection business in the third quarter of 2018, softer sales outside of North America in some end markets and unfavorable currency translation rate changes, partially offset by selling price increases and higher volume sales related to a new customer program. Currency translation rate changes decreased Group net sales by 1.3% in the nine months. Segment profit increased to $114.9M in the quarter from $83.90M in the third quarter last year due primarily to improved supply chain efficiencies and good cost control, partially offset by incremental investments in the new customer program. Segment profit as a percent of net external sales increased in the quarter to 16.9% from 10.9% in the third quarter last year.  Acquisition-related amortization expense in the quarter was $22.60M compared to $26.00M in the third quarter last year. In the first nine months, segment profit increased to $343.50M from $249.10M in the comparable period last year primarily due to improved supply chain efficiencies, moderating raw material costs, good cost control and reduced impacts of acquisition-related amortization expense, partially offset by unfavorable currency translation rate changes. Segment profit as a percent of net external sales increased in the nine months to 16.1% from 11.3% in the same period last year. Acquisition-related amortization expense through nine months was $68.00M compared to $86.40M in the same period last year.  Currency translation rate changes decreased segment profit $3.30M in nine months.

The Performance Coatings Group’s net sales decreased 0.3% to $1.29B in the quarter and decreased 1.4% to $3.84B in nine months. The decrease in both the quarter and nine months was due primarily to softer sales outside of North America in some end markets and unfavorable currency translation rate changes, partially offset by selling price increases. Currency translation rate changes decreased Group net sales by 1.6% and 2.7% in the quarter and nine months, respectively. Segment profit increased in the quarter to $137.40M from $104.90M in the third quarter last year due primarily to moderating raw material costs and good cost control. Segment profit as a percent of net external sales increased in the quarter to 10.7% from 8.1% in the third quarter last year. Acquisition-related amortization expense in the quarter was $54.30M compared to $55.40M in the third quarter last year. Segment profit increased in the first nine months to $386.50M from $339.80M in the same period last year due primarily to moderating raw material costs and good cost control, partially offset by unfavorable currency translation rate changes. Currency translation rate changes decreased segment profit $10.50M in the nine months. Segment profit as a percent of net external sales increased in the first nine months to 10.1% from 8.7% in the same period last year. Acquisition-related amortization expense for the first nine months was $162.40M compared to $160.60M in the same period last year.

Net operating cash improved $230.20M to $1.66B in the nine months. This strong cash generation allowed us to return cash of approximately $892.60M to our shareholders in the form of dividends and share repurchases. The Company purchased 1.325M shares of its common stock in the first nine months, and at September 30, 2019, the Company had remaining authorization to purchase 8.80M shares of its common stock through open market purchases.

SHW has a market value of $53.86B while its EPS was booked as $14.79 in the last 12 months. The stock has 92.07M shares outstanding. In the profitability analysis, the company has gross profit margin of 43.80% while net profit margin was 7.80%. Beta value of the company was 1.28; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.30.