On the February 6th episode of Mad Money, the show’s host Jim Cramer opined on the current share price of Sherwin-Williams stock; THE guru’s first comments on the country’s largest paint maker since Sherwin was added to the Dow Jones Industrial Average in November of last year.
Trading north of $350 per share Cramer imparted that the macro environment was not good for Sherwin-Williams, a slow-moving housing market and high interest rates hurdles in the paint maker’s path. Cramer’s comments echoed concerns raised by Sherwin-Williams CEO Heidi Petz who last week shared that Sherwin may be facing as many as eight quarters of “softness” in demand.
Cramer exclaimed that he was “honestly, shocked” that a share of Sherwin fetched such high prices. Trading at 34-times current earnings Sherwin receives a 40% premium over its compatriots in the Dow and a nearly 50% premium over other chemical companies in their cohort.
That price confounding considering Petz’s and Cramer’s outlooks.
Since the episode’s airing Sherwin has announced the acquisition of BASF’s Brazilian architectural coating’s division, paying $1.15 billion for the Brazilian version of what #PPG just unloaded.
THE headline from a statement released by Sherwin-Williams refers to the acquisition as an “all cash” deal, which it is from the perspective of BASF. What makes the usage vexing was its location under Sherwin’s letterhead.
Because from Sherwin’s perspective this was no cash deal.
Sherwin’s own reporting shows that the company has less than $200 million in cash on hand, not nearly enough to write this check. To cover the overdraft Sherwin will use “liquidity available under existing facilities and new debt.”
Stretching misleading to the edge of its definition.
There’s Still PPG
Another paint manufacturer attracting acerbity from Wall Street is PPG Industries, who remain the country’s second largest paint manufacturer despite their best efforts.
At only 14 times earnings PPG stock trades at a 40% discount to the others in their cohort, reflecting the market’s view that management lacks competency to navigate what may be challenging times ahead.
According to JP Morgan Chase.
Chase analysts claim that PPG faces a “variety of economic and business hurdles,” before adding that PPG has a “history of poor performance during recessions.”
Which Chase posits we might be heading into.
Less concerned for Chase’s Debbie Downering was Ace Hardware who last week announced their earnings posting a strong 4th quarter and year likely putting a smile on Benajmin Moore CEO Dan Calkins. Benjamin Moore sells their premium paints in most Ace locations and also manufactures the coop’s private label.
The now six-year-old relationship likely representing more than a third of #DansVolume.
Flame Out
Polemicists know the risk of their work, among them that our words may incite response from those who don’t agree making a thick skin requisite for anyone who plies THE trade. My blog last week exhorted one such response.
An employee at Pittsburgh shared their view that my blog was mere rumor mongering, an opinion I appreciate though one which I don’t share. Because to monger a rumor requires one to circulate a story of uncertain or doubtful truth.
Which I did; but let me explain.
Spreading misinformation would require present information as true, which my disclosure made clear I did not know to be the case. Absent that the text was the equivalent of something I saw on Tik Tok.
Which I share with you here frequently, never vouching for their validity.
Their flame contained one mention which left me wanting the last word, though I normally don’t respond to rumors. This one though hit close to home, an accusation which allowed its own incitement!
Like selling paint at Walmart it’s folly to think I don’t consider each word and the impacts they may have before I share them here with you, it would be closer to say it’s all I think about. I spend hours ensuring each post speaks to my intention, checking every word to ensure that it comports.
Which doesn’t make this rumor true, leaving it as just something someone else told me.
