Sherwin-Williams Company Stock Buy Recommendation Reiterated (SHW)

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 ( TheStreet) -- Sherwin-Williams Company (NYSE: SHW) 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 revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:
  • SHW's revenue growth has slightly outpaced the industry average of 2.3%. Since the same quarter one year prior, revenues slightly increased by 7.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SHERWIN-WILLIAMS CO reported significant earnings per share improvement 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 $6.48 versus $4.14 in the prior year. This year, the market expects an improvement in earnings ($7.85 versus $6.48).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 705.5% when compared to the same quarter one year prior, rising from $14.55 million to $117.22 million.
  • 45.50% is the gross profit margin for SHERWIN-WILLIAMS CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.27% trails the industry average.
  • Powered by its strong earnings growth of 700.00% and other important driving factors, this stock has surged by 63.99% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.

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 and South America, the Caribbean region, Europe, and Asia. Sherwin-Williams has a market cap of $17.06 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 25.5, above the S&P 500 P/E ratio of 17.7. Shares are up 7.6% year to date as of the close of trading on Thursday.

You can view the full Sherwin-Williams Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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