Valspar (VAL, Financial) recently released its results for the third quarter. The results were impressive with robust growth in sales. It posted earnings and revenue that topped analysts' estimates. Valspar managed to post terrific results on the back of a strong performance in the coatings segment and higher volumes also boosted its sales. Management is confident of posting even better results in the future. The company also posted an upbeat outlook for the future. Let us have a look at Valspar’s moves to capture better operational excellence in order to improve its financial position in future.
Quarterly performance and strong outlook
In the recently reported third quarter, Valspar posted a solid 10% increase in the net sales reporting $1.2 billion on the board. On the earnings front as well Valspar posted a good 13% increase in the EPS. Also, during the quarter the company paid a quarterly dividend of $0.26 per common share outstanding, or $21.7 million.
Valspar had a good quarter. Majority of its product line grew impressively, contributing meaningfully to its portfolio and helped the company deliver strong results. Valspar did take some wise moves in the past which are really paid off for it. The successful integration of the acquisitions and strong performance in China and Europe boosted its sales. There are many key initiatives that Valspar is relying on which can prove a key growth driver for the company in future.
In Europe, the trend is changing and Valspar is pleased with it. In Europe it is seeing progress in the integration of Inver. It is expected to do extremely well in the future. Valspar is also seeing new business wins and change in the customer demand which will help it to growth in the sales of coil coatings. In addition, Valspar is seeing bright opportunities for growth in the paint segment in the international end markets such as China. The company has already seen a doubling sales growth in the past. In U.K., Valspar has also opened B&Q store which is doing well and is expecting to perform even better in future.
Good moves
Moving ahead, Valspar is also restructuring its manufacturing costs which will help it to drive improvement in productivity. It is seeing good improvement and operational excellence in executing various key initiatives including integration of Inver, big launches of new initiatives in retail paints. This is also helping the company to see improvement in the Coatings segments volume, adding meaningfully to the top line.
Valspar is also expecting a lot from the General Industrial Product Line. It is expected to happen under an impact of Inver acquisition. With the growing end-market demands, Valspar is expecting this to improve, delivering better performance that will add value to its profitability growth initiative in the future. The impact of non-BPA products is also remarkable. This is helping the packaging product line to grow well.
Valspar is pleased with the growth momentum which it is seeing. It is happy with the response that the stock got on the exchange after posting strong results. The company is expecting the happy times to continue in future as well. It is now expecting the sales to grow by 9% which is a commendable improvement also on the earnings front; Valspar is expecting the EPS to be in the range of $4.05 to $4.15.
Valspar has also launched it new paint Valspar Reserve which is premium paint. This roll out of this paint over 3,000 Ace Hardware stores is a brave move by the company and it is expecting it to gain enough traction in the market which will help the company to save its skin in declining paint segment.
Conclusion
Now moving to the fundamentals, Valspar is reasonable with a trailing P/E of 21.41, while the forward P/E of 15.54 shows impressive growth in the earnings. Considering all such facts, Valspar looks reasonable at these valuation levels. So, investors can definitely include Valspar in their portfolio for steady growth.
