Slower housing market is a risk

Article Excerpt

SHERWIN-WILLIAMS CO. $380 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 93.1 million; Market cap: $35.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 0.9%; TSINetwork Rating: Above Average; acquired rival paint maker Valspar Corp. on June 1, 2017. If you include Valspar’s debt, the total purchase price was $11.3 billion. Merging the various operations should cut $320 million from Sherwin’s annual costs by the end of the third year. In the three months ended September 30, 2018, sales rose 5.0%, to $4.73 billion from $4.51 billion a year earlier. That’s due to higher paint demand and selling prices in the Americas. If you exclude costs to integrate Valspar and other unusual items, earnings per share jumped 19.6% to $5.68 from $4.75. As a result of the Valspar purchase, Sherwin’s goodwill and other intangible assets now total $12.3 billion, or 35% of its market cap. That adds risk, particularly if the benefits of the acquisition take longer than expected to materialize. As well,…

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