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Sherwin-Williams' (SHW) Q2 Earnings Top Estimates, Sales Lag
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The Sherwin-Williams Company (SHW - Free Report) logged second-quarter 2024 earnings (as reported) of $3.50 per share, up around 14% from $3.07 in the year-ago quarter.
Barring one-time items, adjusted earnings were $3.70 per share, which surpassed the Zacks Consensus Estimate of $3.51.
Sherwin-Williams posted revenues of $6,271.5 million, up around 0.5% year over year. The figure missed the Zacks Consensus Estimate of $6,350.1 million. Consolidated net sales rose mainly owing to increased sales volumes in the Paint Stores and Performance Coatings Groups, which were partly offset by reduced sales volumes in the Consumer Brands Group, taking into account the impact of the China architectural business divestment in 2023.
The Sherwin-Williams Company Price, Consensus and EPS Surprise
The Paint Stores Group segment registered net sales of $3,619.9 million in the second quarter, up around 3.5% year over year. The figure missed the Zacks Consensus Estimate of $3,635.9 million. Net sales in the segment increased primarily as a result of low-single-digit sales volume growth and the sustained realization of higher selling prices. Net sales increased in all end markets, led by residential repaint, new residential, commercial, protective and marine, with the exception of property maintenance, which fell slightly year over year.
Net sales in the Consumer Brands Group segment declined 10.7% year over year to $844.3 million, missing the consensus estimate of $923.4 million. Net sales of the segment dropped primarily due to a mid-single-digit percentage sales volume decline as a result of weak DIY demand in North America, a 2% impact from the divestiture of the China architectural business in 2023 and a 2% impact from unfavorable currency translation.
Net sales in the Performance Coatings Group rose roughly 0.6% year over year to around $1,806.4 million in the reported quarter, beating the consensus estimate of $1,793.6 million. Performance Coating’s net sales increased primarily due to 1.7% incremental sales from an acquisition, which were slightly offset by a 1% negative currency translation. Sales volumes were varied by region and business. Industrial Wood, Coil and Automotive Refinish in North America aided the performance, which was partly offset by a fall in General Industrial across all regions.
Financials
During the first six months of 2024, the company generated $1.14 billion in net operating cash and returned $1.34 billion to shareholders in the form of dividends and 3.1 million shares of common stock repurchases. As of Jun 30, 2024, SHW had remaining authorization to purchase 36.5 million shares of its common stock in open market transactions.
Outlook
SHW raised its adjusted earnings guidance for 2024. The company expects consolidated net sales to be up a low-single-digit percentage year over year for the third quarter. For 2024, it is projected to be up a low-single-digit percentage.
The company expects earnings per share for 2024 to be in the range of $10.3-$10.6. Adjusted earnings are now projected to be $11.10-$11.40 per share for the year. The company expects the effective tax rate to be low 20%.
Price Performance
Shares of Sherwin-Williams have gained 20.3% in the past year compared with a 20.1% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
SHW currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Ero Copper Corp. (ERO - Free Report) and Kinross Gold Corporation (KGC - Free Report) .
Carpenter Technology is slated to report fiscal fourth-quarter results on Jul 25. The Zacks Consensus Estimate for CRS’s fourth-quarter earnings is pegged at $1.52. Its earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 15.1%. The company’s shares have soared 113.2% in the past year. CRS sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ero Copper is slated to report second-quarter results on Aug 1, after market close. The Zacks Consensus Estimate for ERO’s second-quarter earnings is pegged at 27 cents. ERO currently carries a Zacks Rank #2 (Buy).
Kinross will report results for the second quarter on Jul 31. The Zacks Consensus Estimate for Kinross's second-year earnings is pegged at 13 cents. KGC, a Zacks Rank #2 stock, beat the consensus in the last four quarters, with the average earnings surprise being 46%. The stock has surged nearly 79.3% in the past year.
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Sherwin-Williams' (SHW) Q2 Earnings Top Estimates, Sales Lag
The Sherwin-Williams Company (SHW - Free Report) logged second-quarter 2024 earnings (as reported) of $3.50 per share, up around 14% from $3.07 in the year-ago quarter.
Barring one-time items, adjusted earnings were $3.70 per share, which surpassed the Zacks Consensus Estimate of $3.51.
Sherwin-Williams posted revenues of $6,271.5 million, up around 0.5% year over year. The figure missed the Zacks Consensus Estimate of $6,350.1 million. Consolidated net sales rose mainly owing to increased sales volumes in the Paint Stores and Performance Coatings Groups, which were partly offset by reduced sales volumes in the Consumer Brands Group, taking into account the impact of the China architectural business divestment in 2023.
The Sherwin-Williams Company Price, Consensus and EPS Surprise
The Sherwin-Williams Company price-consensus-eps-surprise-chart | The Sherwin-Williams Company Quote
Segmental Review
The Paint Stores Group segment registered net sales of $3,619.9 million in the second quarter, up around 3.5% year over year. The figure missed the Zacks Consensus Estimate of $3,635.9 million. Net sales in the segment increased primarily as a result of low-single-digit sales volume growth and the sustained realization of higher selling prices. Net sales increased in all end markets, led by residential repaint, new residential, commercial, protective and marine, with the exception of property maintenance, which fell slightly year over year.
Net sales in the Consumer Brands Group segment declined 10.7% year over year to $844.3 million, missing the consensus estimate of $923.4 million. Net sales of the segment dropped primarily due to a mid-single-digit percentage sales volume decline as a result of weak DIY demand in North America, a 2% impact from the divestiture of the China architectural business in 2023 and a 2% impact from unfavorable currency translation.
Net sales in the Performance Coatings Group rose roughly 0.6% year over year to around $1,806.4 million in the reported quarter, beating the consensus estimate of $1,793.6 million. Performance Coating’s net sales increased primarily due to 1.7% incremental sales from an acquisition, which were slightly offset by a 1% negative currency translation. Sales volumes were varied by region and business. Industrial Wood, Coil and Automotive Refinish in North America aided the performance, which was partly offset by a fall in General Industrial across all regions.
Financials
During the first six months of 2024, the company generated $1.14 billion in net operating cash and returned $1.34 billion to shareholders in the form of dividends and 3.1 million shares of common stock repurchases. As of Jun 30, 2024, SHW had remaining authorization to purchase 36.5 million shares of its common stock in open market transactions.
Outlook
SHW raised its adjusted earnings guidance for 2024. The company expects consolidated net sales to be up a low-single-digit percentage year over year for the third quarter. For 2024, it is projected to be up a low-single-digit percentage.
The company expects earnings per share for 2024 to be in the range of $10.3-$10.6. Adjusted earnings are now projected to be $11.10-$11.40 per share for the year. The company expects the effective tax rate to be low 20%.
Price Performance
Shares of Sherwin-Williams have gained 20.3% in the past year compared with a 20.1% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
SHW currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Ero Copper Corp. (ERO - Free Report) and Kinross Gold Corporation (KGC - Free Report) .
Carpenter Technology is slated to report fiscal fourth-quarter results on Jul 25. The Zacks Consensus Estimate for CRS’s fourth-quarter earnings is pegged at $1.52. Its earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 15.1%. The company’s shares have soared 113.2% in the past year. CRS sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ero Copper is slated to report second-quarter results on Aug 1, after market close. The Zacks Consensus Estimate for ERO’s second-quarter earnings is pegged at 27 cents. ERO currently carries a Zacks Rank #2 (Buy).
Kinross will report results for the second quarter on Jul 31. The Zacks Consensus Estimate for Kinross's second-year earnings is pegged at 13 cents. KGC, a Zacks Rank #2 stock, beat the consensus in the last four quarters, with the average earnings surprise being 46%. The stock has surged nearly 79.3% in the past year.