Paints and coating manufacturer Sherwin-Williams Co. (SHW, Financial) released first quarter earnings results. On Thursday, Sherwin-Williams shares closed trading down 1.7% to $283.81.
First quarter earnings for Sherwin-Williams rose 25% to $1.42 per share, but fell short of analysts’ predictions of $1.40 per share for this quarter. Cleveland-based Sherwin Williams reported a rise in revenue of 3% reaching $2.45 billion. During the same quarter last year Sherwin-Williams posted an EPS of $1.14.
Analysts are hopeful and predicting $11.21 EPS for the current fiscal year. The company expects their consolidated net sales in 2015’s second quarter to rise by 6% to 8% year-over-year. At this point, Sherwin-Williams anticipates an EPS of $3.70 to $3.90 per share for the quarter versus $2.94 earned in 2015’s second quarter.
The paints and coatings specialist traded down 1.61% this Friday, reaching $284.07. The stock had a trading volume of 871,488 shares with a 52 week low of $193.30 and a 52 week high of $292.51. Sherwin-William’s 50 day moving average is $286 and its 200 day moving average is $259. With a market cap of $26.76 billion the company’s P/E ratio stands at 32.35.
Is a bounce back possible?
Sherwin-Williams believe that sales will jump 6% to 8% with an EPS of $3.70 - $3.90. This guidance is above what investors had expected previously. The fact that Sherwin-Williams reiterated the full-year guidance illustrates the company’s belief that it can still make up for a drop in performance with an even stronger performance for the remainder of the fiscal year.
Despite the mixed results, CEO Christopher Connor said that “It is gratifying to report another quarter of record sales and earnings per share.” Connor sees new store openings and strong operating results as enabling Sherwin-Williams to work through currency related issues in order to come out profitable.
Commitment to shareholders
On May 29, the company will pay out a quarterly dividend to shareholders. They will each be paid $0.67 per share representing a $2.68 annualized dividend with a yield of 0.93%.
Sherwin-Williams continue to demonstrate its commitment to its shareholders by being able to return capital via dividends and share buybacks. Nearly 2 million shares during the first quarter were bought back by the paints manufacturer with the authority to repurchase a further 3.23 million shares. Based on current valuations, Sherwin Williams could commit nearly $900 million towards buybacks, providing reasonable support for the stock price going ahead.
Company Profile
Sherwin-Williams Company is a manufacturer and distributor of paints, coatings, and related products mainly in North and South America with smaller operations in the Caribbean region, Europe and Asia. Dutch Boy, Minwax and Krylon are some of its well-known brands.
Analysis
Based on strong company strengths such as its revenue growth, increase in net income, expanding profit margins and impressive earnings per share growth, analysts see Sherwin-Williams as a BUY stock. These positives will help outweigh the generally high debt management risk the company has.
