A month has gone by since the last earnings report for Sherwin-Williams (SHW Quick QuoteSHW - Free Report) . Shares have added about 13.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sherwin-Williams due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Sherwin-Williams’ Q3 Earnings & Revenues Top Estimates

Sherwin-Williams logged earnings (as reported) of $2.62 per share in third-quarter 2022, up around 39% from $1.88 in the year-ago quarter.

Barring one-time items, adjusted earnings in the reported quarter were $2.83 per share, which topped the Zacks Consensus Estimate of $2.60.

Sherwin-Williams posted revenues of $6,047.4 million, up 17.5% year over year. The figure surpassed the Zacks Consensus Estimate of $5,807.4 million. The upside was driven by higher selling prices in all segments and increased architectural sales volumes in the Americas Group segment. These were partly masked by lower volumes in the Consumer Brands unit. The company witnessed strong demand in the third quarter across all professional architectural markets in the Americas Group.

Segment Review

The Americas Group segment registered net sales of $3,602.7 million in the reported quarter, up around 21% year over year. The upside was mainly owing to higher selling prices and increased architectural sales volume in all markets.

Net sales in the Consumer Brands Group segment rose 8.5% year over year to $701.9 million. Higher selling prices in all regions were partly offset by reduced sales volume mainly outside of North America. The segment faced headwinds in Europe and Asia.

Net sales in the Performance Coatings Group rose roughly 14% year over year to $1,741.7 million in the reported quarter. The upside was mainly driven by higher selling prices and acquisitions. These were partly offset by reduced sales volume outside of North America.

Financials

At the end of the third quarter, Sherwin-Williams had cash and cash equivalents of $130.5 million, down around 58% year over year. Long-term debt increased around 26% year over year to $9,588.9 million.

Sherwin-Williams generated $1.28 billion in net operating cash during the first nine months of 2022. The company also repurchased 2.75 million shares of its common stock during the period.

Outlook

Moving ahead, Sherwin-Williams sees the strong positive results to continue into the fourth quarter. This is projected to be driven by sustained momentum in the Americas Group and industrial end markets in North America, continued price realization, good cost control and softer year-over-year comparisons.

The company expects consolidated net sales to increase high-single to low-double digit percentage year over year in the fourth quarter. For 2022, it is projected to increase by low-double digit percentage.

The company continues to expect adjusted earnings per share for 2022 in the range of $8.50-$8.80.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -7.64% due to these changes.

VGM Scores

Currently, Sherwin-Williams has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sherwin-Williams has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.