Post Earnings Coverage as Valspar’s Q3 Results Falls Short of Estimates

LONDON, UK / ACCESSWIRE / September 9, 2016 / Active Wall St. announces its post-earnings coverage on The Valspar Corporation (NYSE: VAL). The company reported posted its financial results for the third quarter fiscal 2016 (Q3 FY16) on September 07, 2016. The Minneapolis, Minnesota-based company reported a 2% y-o-y growth in its total volume; however, net sales fell 1% on y-o-y basis due to 2% negative foreign currency translation. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on VAL; touching on stocks like The Sherwin-Williams Co. (NYSE: SHW) and Lowe’s Cos. (NYSE: LOW). Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=VAL

http://www.activewallst.com/registration-3/?symbol=SHW

Earnings Reviewed

During the three months ended on July 29, 2016, Valspar reported net sales of $1.14 billion compared to $1.15 billion recorded at the end of Q3 FY15. The market had expected the company to report total revenue of $1.18 million.

The paint maker reported a 14% y-o-y growth in its net income and 15% y-o-y growth in its diluted earnings per share. The company reported net income of $116.99 million, or $1.44 per diluted share, in Q3 FY16 compared to $102.86 million, or $1.25 per diluted share. Adjusted net income (excluding onetime item and $5 million merger-related expenses) surged to $127.32 million, or $1.57 per diluted share, in Q3 FY16 from $108.78 million, or $1.33 per diluted share. The adjusted net income for Q3 FY16 beat market expectation of $1.44 per diluted share.

“In the third quarter, adjusted EBIT increased 7 percent and adjusted EPS grew 18 percent. These results were highlighted by volume growth, new business wins across the portfolio and effective cost management,” stated Gary E. Hendrickson, the company’s Chairman and CEO.

In the reported quarter, adjusted gross profit grew 3% on y-o-y basis to $429.76 million from $415.55 million in Q3 FY15. The company’s adjusted EBIT came in at $185.98 million in Q3 FY16 compared to $174.10 million, in Q3 FY15.

Segment-wise

The company’s Coatings segment reported a 1% y-o-y growth in volume, due to benefits generated out of the acquisition. However, the company’s coating segment sales fell 1% y-o-y to $631.03 million, which was negatively impacted by foreign currency translation and partially offset by acquisition benefits. In Q3 FY16, the segment reported an 8% y-o-y growth in its EBIT of $126.33 million. Additionally, adjusted EBIT grew 6% on y-o-y basis to $127.14 million, primarily driven by benefits from steps undertaken to boost productivity.

Valspar’s Paints segment’s volume also grew 3% on y-o-y basis in Q3 FY16; a 2% growth is attributed to acquisition related benefits. Meanwhile, the segment’s net sales grew marginally to $445 million in the reported period, with a 2% negative impacted of foreign currency translation. Paints segment EBIT surged 28% on y-o-y basis to $58.93 million in Q3 FY16. Furthermore, the segment’s adjusted EBIT grew 30% y-o-y to $67.50 million in Q3 FY16, primarily on productivity initiatives and synergies drawn from Quest acquisition.

Cash Flow & Balance Sheet

At the close of books on July 29, 2016, Valspar had $170.22 million in cash and cash equivalents compared to $342.65 million at the close of books on July 31, 2015. During the quarter, long-term debt decreased around 8.8% y-o-y to $1.56 billion as on July 29, 2016.

Merger Deal

Valspar had signed a definitive merger agreement with The Sherwin-Williams Co. earlier in March 2016. As per the agreement Sherwin-Williams will acquire Valspar for $11.3 billion, or $113 cash per share. The merger proposal has been approved by shareholders of Valspar through a special meeting held on June 29, 2016 and the merger is likely to conclude in the first quarter of calendar year 2017. The deal will provide Sherwin-Williams access to buyers who purchase Valspar products from retailers like Lowe’s Cos. and Ace Hardware stores.

Stock Performance

Valspar’s stock is trading slightly up by 0.03%, closing Thursday’s session at $105.85 on volume of 170.5 thousand shares. The company’s shares gained 28.93% since the beginning of the year. Additionally, the stock has advanced 33.50% in the last six months. The company’s shares have a PE ratio of 25.46 and a dividend yield of 1.25%.

Active Wall Street:

Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

AWS has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the “Author”) and is fact checked and reviewed by a third party research service company (the “Reviewer”) represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the “Sponsor”), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you’re a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: info@activewallst.com

Phone number: 1-858-257-3144

Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Active Wall Street

ReleaseID: 445033