Why Sherwin-Williams (SHW) Stock Is Up Today

NEW YORK (TheStreet) -- Sherwin-Williams  (SHW) rose to a high of $200 for the day on Thursday after the paint products maker reported a 9.2% year-over-year revenue increase in its first-quarter earnings report.

Sherwin-Williams said revenue rose to $2.37 billion from $2.17 billion in the same period one year earlier. Selling, general and administrative expenses increased 14% to $884 million, which led to an earnings dip. Earnings totaled $115.5 million, or $1.14 a share, down from $116.2 million, or $1.11 a share, in the same quarter one year ago.

Sales in stores open at least a year rose 7.9% in the quarter.

The company also forecast earnings in the range of $2.80 a share to $3 a share and an 8% to 14% revenue increase in the second quarter. Analysts expected $2.86 a share and a 10% revenue increase.

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Separately, TheStreet Ratings team rates SHERWIN-WILLIAMS CO as a "buy" with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate SHERWIN-WILLIAMS CO (SHW) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 $7.26 versus $6.01 in the prior year. This year, the market expects an improvement in earnings ($8.43 versus $7.26).
  • 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 70.6% when compared to the same quarter one year prior, rising from $68.05 million to $116.12 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.7%. Since the same quarter one year prior, revenues rose by 10.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Chemicals industry and the overall market, SHERWIN-WILLIAMS CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 47.73% 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 4.72% trails the industry average.
  • You can view the full analysis from the report here: SHW Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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