Tags: Sherwin | Williams | economy | SHW

Sherwin Williams Performs in a Tough Economy

By    |   Wednesday, 21 Dec 2011 10:39 AM

Sherwin Williams (SHW) employs a different business model than its competitors in the paint and coating industry. With that model the company performs well — reporting record sales and earnings — in a tough economy.

Sherwin Williams manufactures, distributes and retails paint and coatings products. Its brand names include Minwax, Krylon and Thompson's wood sealers as well as the corporate Sherwin Williams brand.

The business is divided into the Paint Stores Group, Consumer Group, and Global Finishes Group. The Paint Stores generate approximately 55 percent of total revenues and 65 percent of company profits. At the end of the 2011 third quarter, the Paint Stores Group included 3,400 locations and the Global Finishes Group had 570 international retail locations.

For the first nine months of 2011, Sherwin Williams reported record revenues of $6.7 billion, up from $5.88 billion a year earlier. Net income for the period was $3.98, up 13 percent from $3.53 for the first three quarters of 2010.

For the full year 2011 the company is forecast to earn $4.81 per share and the earnings estimate for 2012 is $5.56.

Retail drives revenues

The 3,400 Sherwin Williams retail stores provide a competitive advantage. The nine competitors with retail locations have less than 1,800 stores in total. The company's Consumer Group sells paint and coating products to an additional 38,000 retail outlets, providing the company retail exposure in a majority of the 56,000 U.S. retail outlets which sell paint and coating products.

The Global Finishes Group is driving growth, with revenues up almost 40 percent in the first nine months to just over $2 billion. Domestic growth of 10 percent from the Paint Stores has been primarily driven by price increases. The Sherwin Williams web site notes the company has increased the annual dividend every year since 1979.

Wall Street analysts are generally neutral on SHW. Keybanc Capital Markets analysts recently resumed coverage on the stock with a hold rating, and analysts at Barclays Capital have initiated coverage with an equal weight rating.

The company next reports on Jan. 25.

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Sherwin Williams (SHW) employs a different business model than its competitors in the paint and coating industry. With that model the company performs well reporting record sales and earnings in a tough economy. Sherwin Williams manufactures, distributes and retails...
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Wednesday, 21 Dec 2011 10:39 AM
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