Valspar fiscal Q1 below expectations - Citigroup

13 February 2007 16:19  [Source: ICIS news]

TORONTO (ICIS news)--US coatings and paint maker Valspar delivered surprisingly weak fiscal 2007 first-quarter results with earnings per share (EPS) well below analysts’ estimates, Citigroup said on Tuesday.

 

Citigroup had estimated EPS for Valspar's fiscal 2007 first quarter ended 26 January 2007 at 30 cents, compared with the 23 cents the company recorded for that period.

 

Citigroup pointed to Valspar’s architectural and wood coatings business, which suffered on the back of the weak US housing market.

 

The analysts said that architectural paints and coatings producers typically suffer up to nine months after a housing slowdown as paint is the last item to go on a house.

 

“This is catching up with Valspar,” Citigroup said, adding: “We believe this is the beginning of pain for the paint chain.”

 

The weakness at Valspar could impact the first-quarter performance of Rohm and Haas, a supplier of acrylic monomer to Valspar, the analysts noted.

 

In a separate research note, JPMorgan said on Tuesday that going into 2007 Valspar should benefit from its operations in China.

 

In addition, flat or lower raw material costs may enable the Minneapolis, Minnesota-based company to expand its margins later in the year, JPMorgan said.

 

Citigroup has a $32 (€25) target price on Valspar’s shares. The shares were priced at $27.43/share, up 0.7%, in early Tuesday morning trading in New York. JPMorgan does not provide target prices.

 

($1=€0.77)

By: Stefan Baumgarten
+1 713 525 2653

< previous article(VIDEO – ICIS news Americas Lunchtime Bulletin 29 Oct 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly