The Sherwin-Williams Company SHW is benefiting from strong demand in its domestic end markets, pricing and cost-control initiatives and expansion of operations.

Shares of Sherwin-Williams, a Zacks Rank #2 (Buy) stock, have lost 27.9% over the past year against the 24.8% decline of its industry.

Image Source: Zacks Investment Research

Sherwin-Williams is gaining from favorable demand in domestic markets. It is witnessing strong architectural sales volumes, which is driving sales in the Americas Group segment. It saw strong demand in the third quarter of 2022 across all professional architectural markets in the Americas Group.

The company, in its third-quarter call, said that it sees the strong positive results to continue into the fourth quarter. This is projected to be driven by sustained momentum in the Americas Group and industrial end markets in North America, continued price realization, good cost control and softer year-over-year comparisons. It expects consolidated net sales to increase high-single to low-double digit percentage year over year in the fourth quarter.

Sherwin-Williams’ cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are also expected to provide margin benefits. It is also implementing pricing actions to offset cost inflation, especially in raw materials.

The company also remains committed toward expanding its retail operations. It is focused on capturing a larger share of its end-markets, as is evident from increasing number of retail stores. It added 32 net new stores through the first three quarters of 2022 and expects to add 40-50 new stores in the fourth quarter.

Sherwin-Williams also has a strong liquidity position and is using its cash strategically. It generated $1.28 billion in net operating cash during the first nine months of 2022. The company also repurchased 2.75 million shares of its common stock during the period. It had remaining authorization to repurchase 45.8 million shares through open market purchases at the end of the third quarter.

The SherwinWilliams Company Price and Consensus

The SherwinWilliams Company price-consensus-chart | The SherwinWilliams Company Quote

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Olympic Steel, Inc. ZEUS, Commercial Metals Company CMC and Nucor Corporation NUE.

Olympic Steel currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 4.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Olympic Steel’s earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.4%, on average. ZEUS has rallied around 37% in a year.

Commercial Metals currently carries a Zacks Rank #1. The consensus estimate for CMC's current-year earnings has been revised 10.2% upward in the past 60 days.

Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 16.7%, on average. CMC has gained around 48% in a year.

Nucor currently carries a Zacks Rank #1. The company has a projected earnings growth rate of 21.5% for the current year.

Nucor’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 3.9%, on average.  NUE has rallied roughly 36% in a year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The SherwinWilliams Company (SHW) : Free Stock Analysis Report

Nucor Corporation (NUE) : Free Stock Analysis Report

Commercial Metals Company (CMC) : Free Stock Analysis Report

Olympic Steel, Inc. (ZEUS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research