Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, solid stock price performance, expanding profit margins and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
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Highlights from the ratings report include:
- SHERWIN-WILLIAMS CO has improved earnings per share by 16.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SHERWIN-WILLIAMS CO increased its bottom line by earning $6.01 versus $4.14 in the prior year. This year, the market expects an improvement in earnings ($7.85 versus $6.01).
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 49.27% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- 44.40% is the gross profit margin for SHERWIN-WILLIAMS CO which we consider to be strong. Regardless of SHW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.36% trails the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Chemicals industry average, but is greater than that of the S&P 500. The net income increased by 15.9% when compared to the same quarter one year prior, going from $100.22 million to $116.19 million.
The Sherwin-Williams Company engages in the development, manufacture, distribution, and sale of paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North America, South America, Europe, Asia, and the Caribbean region. Sherwin-Williams has a market cap of $18.5 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 29.00, above the S&P 500 P/E ratio of 18.00. Shares are up 17.5% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.
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