Valspar Earnings Preview

Valspar (NYSE: VAL  ) came in right in line with the Street's expectations last quarter, but investors are hoping that it will beat them this quarter. The company will unveil its latest earnings on Monday, Nov. 21. Valspar is a global coatings and paints manufacturer and distributor.

What analysts say:

• Buy, sell, or hold?: Half of analysts think investors should stand pat on Valspar while the remaining half rate the stock as a buy. Analysts don't like Valspar as much as competitor RPM International overall. Four out of seven analysts rate RPM International a buy compared to five out of 10 for Valspar. Analysts haven't adjusted their rating of Valspar for the past three months.
• Revenue forecasts: On average, analysts predict $1.04 billion in revenue this quarter. That would represent a rise of 18.6% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.70 per share. Estimates range from $0.68 to $0.73.

What our community says:
CAPS All-Stars are solidly backing the stock, with 97.4% granting it an outperform rating. The community at large agrees with the All-Stars, with 89.6% assigning it a rating of outperform. Fools are keen on Valspar, though the message boards have been quiet lately, with only 31 posts in the past 30 days. Though still bullish, the CAPS rating of four out of five stars for Valspar is a bit more pessimistic than the community assessment.

Management:
Valspar's income has fallen year over year by an average of 4.4% over the past five quarters. The company's gross margin shrank by 3 percentage points in the last quarter. Revenue rose 22.5% while cost of sales rose 28% to $746.1 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q3	Q2	Q1	Q4
Gross Margin	30.3%	31.8%	30.7%	33.1%
Operating Margin	10.3%	10%	7.5%	10.5%
Net Margin	6.3%	5.7%	4%	5.9%

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Earnings estimates provided by Zacks.