The Sherwin-Williams Company (NYSE:SHW) last week reported its latest third-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Sherwin-Williams reported US$5.1b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$7.66 beat expectations, being 5.5% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Sherwin-Williams' 24 analysts is for revenues of US$19.0b in 2021, which would reflect a modest 5.6% increase on its sales over the past 12 months. Statutory earnings per share are predicted to step up 13% to US$23.17. In the lead-up to this report, the analysts had been modelling revenues of US$18.9b and earnings per share (EPS) of US$23.34 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$731, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Sherwin-Williams analyst has a price target of US$818 per share, while the most pessimistic values it at US$380. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Sherwin-Williams' revenue growth is expected to slow, with forecast 5.6% increase next year well below the historical 12%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.6% next year. Factoring in the forecast slowdown in growth, it looks like Sherwin-Williams is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Sherwin-Williams going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Sherwin-Williams .
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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