Sherwin-Williams: Santa Clara Case Set for Trial
Paint giant Sherwin-Williams (SHW) said that the presiding judge in a proceeding in the Superior Court of the State of California, County of Santa Clara, has issued an order setting the lead paint trial to commence on Jul 15. Earlier, in May, the judge postponed the previous trial date of Jun 24.
Sherwin-Williams is among the defendants in a proceeding involving a claim of public nuisance brought by ten of California's largest cities and counties. They claimed that the presence of lead pigments in residential paints and coatings constituted a public nuisance and endangered the health of millions in the state. The plaintiffs seek the abatement of the alleged public nuisance and recovery based on various legal theories.
Lead paint legal proceedings were also brought by the state of Rhode Island, the city of St. Louis, Mo., various cities and counties in the State of New Jersey, the state of Ohio and various cities in the state of Ohio, the city of Chicago, Ill., and the city of Milwaukee, Wis. These include claims by children allegedly injured from ingestion of lead pigment or lead-containing paint and claims for damages incurred by the children’s parents or guardians.
However, except for the Santa Clara case, all other proceedings have been concluded in favor of Sherwin-Williams and other defendants. As such, investors will be closely watching the outcome of the Santa Clara lead trial.
Sherwin-Williams, which is among the major paint companies along with Akzo Nobel NV (AKZOY), follows a strategy of growth through acquisitions and internal initiatives such as efficient working capital management and innovation. Its philosophy is to diversify its customer base and expand its operations into various geographies.
Sherwin-Williams continues to invest in its Paint Stores Group segment to boost market share. It is also implementing effective pricing strategies to offset higher raw material costs.
In addition, the acquisition of Consorcio Comex S.A. de C.V. should usher in significant opportunity. The acquisition will enable Sherwin-Williams to expand its architectural paint business in the Americas.
However, Sherwin-Williams remains exposed to currency headwinds. Its consumer and paint stores businesses still remain impacted by the U.S. economic weakness. A material recovery in the housing and commercial construction markets is not expected in the near term.
Sherwin-Williams carries a Zacks Rank #3 (Hold).
Other specialty chemicals companies with favorable Zacks Rank are OM Group Inc. (OMG) and Ferro Corp. (FOE). While OM Group holds a Zacks Rank #1 (Strong Buy), Ferro retains a Zacks Rank #2 (Buy).
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