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At this point in time, it is difficult to determine if Cleveland paint manufacturer, Sherwin-Williams (SHW - 22-1/4), will be singing "A Whiter Shade of Pale" or "Black is Black." This morning, SHW reduced its earnings outlook for fiscal year 2001. The company said its sales increase for the year will drop to the low end of its previously projected 4% to 6% range. SHW expects earnings to come in at $1.90 per diluted share for the year, below the $1.96 to $2 per share previously projected in October. The current Street estimate is $1.97 a share.
In a press release today, the company said poor sales of exterior coatings in paint-store and consumer segments ate into operating profit margins. Also cited were softer than anticipated retail markets, causing major retailers in the U.S. and U.K. markets to make inventory corrections. The shares first dipped in response to the news, but have since rebounded.
Options traders have shown little interest in the stock. Total open interest is just 1,908 contracts, represented by 646 open put positions and 1,262 open call positions.
Short interest over the most recent reporting period increased by almost 34 percent, as short sellers have little incentive to cover their positions. The shares have not closed above their 20-month moving average since May, 1999.