SHERWIN-WILLIAMS CO. $107 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 103.8 million; Market cap: $11.1 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.sherwin.com) is North America’s largest paint producer. It also operates 3,450 paint stores, which account for 55% of its sales.
The company earned $441.9 million in 2011, down 4.5% from $462.5 million in 2010. Earnings per share fell 1.7%, to $4.14 from $4.21, on fewer shares outstanding. If you exclude unusual items, such as costs to settle an income tax dispute, earnings per share would have risen 9.9%, to $4.87 from $4.43. Sales rose 12.7%, to $8.8 billion from $7.8 billion.
The stock has gained over 30% in the past year, and now trades at 18.7 times Sherwin’s projected 2012 earnings of $5.72 a share. That’s a high p/e ratio for a company that is so closely tied to the U.S. housing market. Rising oil prices could also squeeze Sherwin’s profit margins (the company uses oil to make its paint).
Sherwin-Williams is a hold.
