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What's in Store for Sherwin-Williams (SHW) in Q1 Earnings?
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The Sherwin-Williams Company (SHW - Free Report) is set to release first-quarter 2018 results ahead of the bell on Apr 24.
In the last quarter, the paints and coatings giant posted adjusted earnings of $2.95 per share, which missed the Zacks Consensus Estimate of $3.18, translating into a negative earnings surprise of 7.2%.
Sherwin-Williams posted record fourth-quarter revenues of $3,979.6 million, up 43% year over year. It surpassed the Zacks Consensus Estimate of $3,941.2 million. Sales were driven by increased paint sales volumes in the Americas Group unit and the Valspar acquisition.
The company beat the Zacks Consensus Estimate in two of the trailing four quarters, while missed twice, delivering an average positive surprise of around 0.8%.
Shares of Sherwin-Williams have moved up 22.1% over a year, outperforming the industry’s 19% gain.
Let’s see how things are shaping up for this announcement.
Factors at Play
Sherwin-Williams, in its fourth-quarter 2017 call, said that it sees mid-to-high single digit percentage increase in net sales year over year for first-quarter 2018. It also sees incremental sales from Valspar acquisition to be roughly $1 billion in the first quarter.
For 2018, Sherwin-Williams expects mid-to-high single digit percentage increase in net sales from 2017. It also sees incremental sales from the Valspar buyout to be roughly $1.6 billion for the first five months of the year. At this level, the company expects earnings per share for the year to be in the range of $15.35 to $15.85 per share, compared with $18.67 earned in 2017. The guidance includes around $3.45 per share charge related to the Valspar acquisition.
The Valspar acquisition has enabled Sherwin-Williams to strengthen its position as a leading paints and coatings provider globally, leveraging highly complementary offerings, strong brands and technologies. Sherwin-Williams should gain from significant synergies of the acquisition. The company expects to achieve $320 million in annual run-rate synergies by the end of 2018.
The Zacks Consensus Estimate for consolidated net sales for Sherwin-Williams for the first quarter is $3,984 million, reflecting a year-over-year increase of around 44.3%.
Net sales from the Americas Group segment for the first quarter is projected to decrease roughly 4.1% from the fourth quarter as the Zacks Consensus Estimate for the first quarter is currently pegged at $2,100 million.
Net sales from the Consumer Brands Group segment for the first quarter is projected to increase roughly 14.2% sequentially as the Zacks Consensus Estimate for the first quarter is currently pegged at $653 million.
Net sales from the Performance Coatings Group segment for the first quarter is projected to decrease roughly 2.3% from the fourth quarter as the Zacks Consensus Estimate for the first quarter is currently pegged at $1,190 million.
Sherwin-Williams’ cost control initiatives, working capital reductions, supply chain optimization and productivity improvement should yield margin benefits. Working capital management and efforts to cut operating costs are also helping the company to generate healthy cash flows. Moreover, addition of Valspar-related sales should continue to support the company’s top line in the to-be-reported quarter.
However, the company faces headwinds from higher raw materials costs. Sherwin-Williams is witnessing inflation across several raw material categories including titanium dioxide (TiO2) and propylene this year. The company expects higher year over year input costs in first-half 2018 and projects average inflation to be in the 4% to 6% band for this year. The company is taking appropriate pricing actions in the wake of a spike in input costs.
The Sherwin-Williams Company Price and EPS Surprise
Our proven model does not conclusively show that Sherwin-Williams is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: Earnings ESP for Sherwin-Williams for the first quarter is -3.96%. This is because the Most Accurate estimate stands at $3.02 while the Zacks Consensus Estimate is pegged at $3.14. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Sherwin-Williams currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Estimates
Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:
FMC Corporation (FMC - Free Report) has an Earnings ESP of +1.43% and carries a Zacks Rank #2.
Kinross Gold Corporation (KGC - Free Report) has an Earnings ESP of +11.11% and carries a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
What's in Store for Sherwin-Williams (SHW) in Q1 Earnings?
The Sherwin-Williams Company (SHW - Free Report) is set to release first-quarter 2018 results ahead of the bell on Apr 24.
In the last quarter, the paints and coatings giant posted adjusted earnings of $2.95 per share, which missed the Zacks Consensus Estimate of $3.18, translating into a negative earnings surprise of 7.2%.
Sherwin-Williams posted record fourth-quarter revenues of $3,979.6 million, up 43% year over year. It surpassed the Zacks Consensus Estimate of $3,941.2 million. Sales were driven by increased paint sales volumes in the Americas Group unit and the Valspar acquisition.
The company beat the Zacks Consensus Estimate in two of the trailing four quarters, while missed twice, delivering an average positive surprise of around 0.8%.
Shares of Sherwin-Williams have moved up 22.1% over a year, outperforming the industry’s 19% gain.
Let’s see how things are shaping up for this announcement.
Factors at Play
Sherwin-Williams, in its fourth-quarter 2017 call, said that it sees mid-to-high single digit percentage increase in net sales year over year for first-quarter 2018. It also sees incremental sales from Valspar acquisition to be roughly $1 billion in the first quarter.
For 2018, Sherwin-Williams expects mid-to-high single digit percentage increase in net sales from 2017. It also sees incremental sales from the Valspar buyout to be roughly $1.6 billion for the first five months of the year. At this level, the company expects earnings per share for the year to be in the range of $15.35 to $15.85 per share, compared with $18.67 earned in 2017. The guidance includes around $3.45 per share charge related to the Valspar acquisition.
The Valspar acquisition has enabled Sherwin-Williams to strengthen its position as a leading paints and coatings provider globally, leveraging highly complementary offerings, strong brands and technologies. Sherwin-Williams should gain from significant synergies of the acquisition. The company expects to achieve $320 million in annual run-rate synergies by the end of 2018.
The Zacks Consensus Estimate for consolidated net sales for Sherwin-Williams for the first quarter is $3,984 million, reflecting a year-over-year increase of around 44.3%.
Net sales from the Americas Group segment for the first quarter is projected to decrease roughly 4.1% from the fourth quarter as the Zacks Consensus Estimate for the first quarter is currently pegged at $2,100 million.
Net sales from the Consumer Brands Group segment for the first quarter is projected to increase roughly 14.2% sequentially as the Zacks Consensus Estimate for the first quarter is currently pegged at $653 million.
Net sales from the Performance Coatings Group segment for the first quarter is projected to decrease roughly 2.3% from the fourth quarter as the Zacks Consensus Estimate for the first quarter is currently pegged at $1,190 million.
Sherwin-Williams’ cost control initiatives, working capital reductions, supply chain optimization and productivity improvement should yield margin benefits. Working capital management and efforts to cut operating costs are also helping the company to generate healthy cash flows. Moreover, addition of Valspar-related sales should continue to support the company’s top line in the to-be-reported quarter.
However, the company faces headwinds from higher raw materials costs. Sherwin-Williams is witnessing inflation across several raw material categories including titanium dioxide (TiO2) and propylene this year. The company expects higher year over year input costs in first-half 2018 and projects average inflation to be in the 4% to 6% band for this year. The company is taking appropriate pricing actions in the wake of a spike in input costs.
The Sherwin-Williams Company Price and EPS Surprise
The Sherwin-Williams Company price-eps-surprise | The Sherwin-Williams Company Quote
Earnings Whispers
Our proven model does not conclusively show that Sherwin-Williams is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: Earnings ESP for Sherwin-Williams for the first quarter is -3.96%. This is because the Most Accurate estimate stands at $3.02 while the Zacks Consensus Estimate is pegged at $3.14. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Sherwin-Williams currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Estimates
Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:
Allegheny Technologies Incorporated (ATI - Free Report) has an Earnings ESP of +9.38% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
FMC Corporation (FMC - Free Report) has an Earnings ESP of +1.43% and carries a Zacks Rank #2.
Kinross Gold Corporation (KGC - Free Report) has an Earnings ESP of +11.11% and carries a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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