Newspaper article Sarasota Herald Tribune

Sherwin-Williams Covers with Profit?

Newspaper article Sarasota Herald Tribune

Sherwin-Williams Covers with Profit?

Article excerpt


How unfortunate it is that wealth derived from achieving professional success does not bestow a comparable level of investment expertise. Alas, neither does eligibility for Social Security. To the detriment of the gullible, enviable returns are promised by pseudo experts with a supposedly elite understanding of market trends and psychology.

It is no real surprise that the promised returns are rarely, if ever, forthcoming.

Yet a cornucopia of quality investments is readily available to virtually everyone. A good example is Sherwin-Williams (SHW), the nation's largest paint manufacturer, known for its slogan that it covers the world.

Founded in 1866, Sherwin-Williams is a global leader in the manufacture, development, distribution and sale of coatings and related products to professional, industrial, commercial and retail customers. The company manufactures products under well-known brands such as Sherwin-Williams, Dutch Boy, Krylon, Minwax, Thompson's Water Seal and many more.

Sherwin-Williams' branded products are sold exclusively through more than 4,000 company-operated stores and facilities, while the company's other brands are sold through leading mass merchandisers. The Sherwin-Williams Global Finishes Group distributes a wide range of products in more than 109 countries.

When I last wrote about the company a year ago, my earnings estimate for 2015 was $11.13 per share, with a 12-month target price on the shares of $322, for a capital gain of about 15 percent. In addition, a dividend was indicated of $2.20, or 0.80 percent.

So how did the year turn out for the company?

For full-year 2015, Sherwin-Williams logged revenues of $11.34 billion, up 1.9 percent from 2014, along with earnings of $11.16 per share, up roughly 27 percent from $8.78 per share earned in 2014 and slightly ahead of my estimate. Unfortunately, the stock market's rather miserable performance had the stock closing recently at $256.86 or, to put it another way, maybe the shares are currently on sale.

An increased volume of paint sales in the company's Paint Stores and Consumer Groups division led to higher sales during the fourth quarter, but this was partly offset by an unfavorable exchange rate. …

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