Paint retailers never had it so good. After the crazy run up last year, stocks in the industry are just not willing to give up. Recent numbers have been good, and stocks continue to inch higher. Sherwin-Williams Company (NYSE:SHW), PPG Industries, Inc. (NYSE:PPG), The Valspar Corporation (NYSE:VAL): you name it and it might have just hit a fresh 52-week high!
Of these, Sherwin won the 2012 game, and is ready to keep it rolling as it rings the earnings bell Jan. 31. Will it hit a higher spot next week? Quite possible, for 4 reasons.
Sherwin knows how to tickle
Sherwin’s stock should hold steady if the company manages to cough up earnings of $1.16 per share, which would be a significant upside from last year’s EPS of $0.84. That’s what analysts are expecting. Sherwin actually bumped up its full-year earnings guidance to a range $6.35 to $6.55 per share last quarter. That would be a solid 31% gain even at the lower end.
Better still, Sherwin’s stock could stretch out a bit more if it manages to do even better. What are the chances? Pretty high. The company stumped the Street in each of the last four quarters by good margins. This one could be no different. At least that’s what peers are suggesting.
Sherwin knows how to lead
PPG Industries’ fourth-quarter numbers were spot-on, with the company delivering its tenth straight quarter of record earnings per share (on an adjusted basis). Sales for its U.S. architectural coatings grew in the “high single-digits.” What has that got to do with Sherwin? Well, most of Sherwin’s revenue from the U.S. comes from architectural coatings.
RPM International Inc. (NYSE:RPM) had an equally good last quarter with net sales clocking 11% gains. That’s not all. Its consumer segment reported a whopping 19% jump in sales, with 6% attributed to organic growth. Three out of Sherwin’s four divisions rely on consumer sales. So you know what to expect.
Sherwin has the wind at its back
Sale of new homes ticked up further in November, improving 4.4% sequentially and 15.3% from last year (December data is slated for Jan. 25 release). Existing home sales, though slipping marginally in December, capped 2012 with its best gains in 5 years. That’s terrific news for Sherwin, simply because the fate of its largest division, Paint Stores, hangs largely on housing activity.
Home improvement stores are enjoying the euphoria as well. Both Lowe’s and The Home Depot, Inc. (NYSE:HD) are currently flirting with their respective 52-week highs. Retails sales improved in November as well as in December. With December also marking a key holiday season, sales growth for these companies should be good enough for their last quarters, which in turn bodes well for Sherwin.