NEW YORK (TheStreet) -- Valspar (VAL) shares were upgraded to "conviction buy" from "neutral" by analysts at Goldman Sachs (GS) who also increased the company's price target to $97 from $83.
The firm cited an improving U.S. housing market and the strength of the paint and coatings business' Australian operations as reasons for the more optimistic outlook.
Valspar shares are up 3.4% to $78.29 in early market trading today.
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Separately, TheStreet Ratings team rates VALSPAR CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate VALSPAR CORP (VAL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, increase in stock price during the past year, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VAL's revenue growth has slightly outpaced the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 9.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- VALSPAR CORP has improved earnings per share by 17.9% 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, VALSPAR CORP increased its bottom line by earning $3.20 versus $3.09 in the prior year. This year, the market expects an improvement in earnings ($4.10 versus $3.20).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Chemicals industry average. The net income increased by 11.8% when compared to the same quarter one year prior, going from $76.91 million to $85.96 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Chemicals industry and the overall market, VALSPAR CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- You can view the full analysis from the report here: VAL Ratings Report