By Jeff Sanford
Toronto, Ontario — September 7, 2015 — Paint-maker Valspar continues to expand as it absorbs recent acquisitions. But like many American companies the higher US dollar has some analysts tweaking future valuations. Or so it seems.
Valspar has made some recent smart acquisitions. The company recently bought up the paint manufacturing assets of Ace Hardware and is beginning to distribute products through that channel. The company also strengthened its position in the European industrial coatings market with the takeover of Italy-based industrial coatings maker Inver Holding S.r.l. The purchase of Quest Specialty Chemicals’ performance coatings businesses strengthens the company’s position in the automotive refinish market.
But like many companies in the US, the stronger US dollar is creating a slight drag on growth. The company’s products have become more expensive compared to foreign competitors. This is an issue for companies right across the American economy today. The currency fluctuations are having a bit of an effect on estimates of future earnings. According to recent media reports the company expects revenues for fiscal 2015 to fall to the “mid single-digits year over year.”
Following on this assessment target stock prices for the company have been lowered by some analysts.
Most recently brokerage firm Robert W. Baird lowered its target on the stock from $90.00 to $85.00. Zacks cut Valspar Corp from a “buy” rating to a “hold” this past summer. Earlier this month JPMorgan Chase & Co. cut Valspar from an “overweight” rating to a “neutral” rating and lowered their target price for the company from $92.00 to $88.00. RBC Capital also cut their target price this summer on Valspart, decreasing its target from $88.00 to $80.00.
Even so, Valspar is currently trading at $74, well below these target prices. So the stock price is still expected to grow.
The company reported earnings of $1.33 per share for the quarter. This beat the consensus estimate of $1.26 by $0.07. Overall, the firm’s quarterly revenue was down 6.5 percent compared to the same quarter last year.
