Valspar Posts Strong 4Q Profit Growth

25 November 2002 00:00  [Source: ICB Americas]

Valspar Corp. posted a 16 percent gain in fiscal fourth quarter (ending October 25) earnings to $34.9 million (68 cents per share) on 8 percent higher sales of $566.8 million.

"While continued softness in the industrial economy constrained the performance of our industrial coatings product line, our architectural and packaging coatings product lines generated strong results throughout the year," says chairman and CEO Richard M. Rompala. He adds that Valspar has completed most of the restructuring activities associated with its acquisition of Lilly Industries Inc.

Despite a choppy economy, Mr. Rompala expects fiscal first quarter earnings per share to show 20 percent growth, and he expresses confidence in another good year for Valspar in 2003.

Lehman Brothers analyst Timothy Gerdeman, who recently downgraded Valspar from "overweight" to "equal weight," expects tougher comparisons in fiscal 2003. "We expect architectural paint sales comps to be more challenging in fiscal 2003, packaging coatings sales to remain modest and industrial coatings sales to remain sluggish until the industrial economy cooperates," he says.

However, Merrill Lynch analyst Karen Lane Gilsenan raised her price target on Valspar from $47 to $50. Shares currently trade at around $44.50. The analyst is maintaining her fiscal 2003 earnings per share estimate at $2.65 and introducing a fiscal 2004 estimate of $3, representing 13 percent growth.

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