Shares of Valspar Corp. rose 4 percent and hit a 12-month high Tuesday after the Minneapolis paint and coatings company posted better-than-expected earnings for its first quarter and boosted its earnings forecast for the year.
The company said price increases, productivity improvements and new business are helping it win the battle against rising raw material costs and a lackluster housing market. Valspar's sales for the quarter ended Jan. 27 rose 5 percent to $885.6 million while earnings climbed 67 percent to $55.8 million. Adjusted earnings per share were 62 cents, up from 39 cents a year earlier and 10 cents higher than analysts' estimates.
Valspar's stock closed at $45.82 a share on unusually high volume of more than 3.3 million shares. The stock has risen about 20 percent in the last 12 months, outperforming the shares of its peers like Sherwin-Williams and PPG Industries.
"We're planning for a challenging macroenvironment," said CEO Gary Hendrickson in a conference call. He said the company expects raw material inflation to continue this year and will offset those higher costs with further price increases to its customers.
Saul Ludwig, an analyst at Northcoast Research in Cleveland, noted that Valspar's bottom line also benefited from a lower tax rate. But he also said that for the past several quarters the company has done of good job of navigating around the challenges of raw material inflation and flat paint sales due to the poor housing market. In addition to raising prices, Valspar has trimmed some costs by closing some plants, Ludwig said.
Valspar increased its full-year earnings guidance to $2.92 to $3.12 a share. Previously, it was $2.87 to $3.07 a share.
Staff writer Wendy Lee contributed to this report. Susan Feyder • 612-673-1723
