Sherwin Williams: Cheap and Growing

Why does Wall St. keep selling shares of Sherwin Williams (SHW) in the face of its continued increase of its earnings guidance? Sherwin-Williams said at the Citi Basic Materials Symposium it continues to expect 2007 earnings of $4.70 to $4.75 per share. The current consensus earnings estimate is $4.73 per share.

It is hard to quantify what is more confusing. The lack of support from investors or the lack of interest from a suitor. Sherwin is cheap and growing. My hope is that Andrew Liveris at Dow Chemical (DOW) is reading this and takes a look at the company. Sherwin has everything Liveris has specified he wants in an acquisition.

It is growing earnings despite a negative operating environment, Liveris could do the deal without substantially adding to Dow's debt, the acquisition would be immediately accretive to earnings and it would add substantially to the specialty coatings business he has said he wants to develop further.

In short, there is nothing about the deal not to like for Dow, unless, unless that is they are working on something much larger... Either way, Sherwin shares are going to surge when either Wall St. notices it or a potential buyer does. There are going to be a bunch of folks sitting around not too long from now saying, "I wish I had bought back then..." We did, don't worry, we will console you....