Sherwin-Williams (SHW) Beats on Q3 Earnings & Sales, Ups View
The Sherwin-Williams Company SHW logged third-quarter 2023 earnings (as reported) of $2.95 per share, up around 12.6% from $2.62 in the year-ago quarter.
Barring one-time items, adjusted earnings in the reported quarter were $3.20 per share, which surpassed the Zacks Consensus Estimate of $2.77.
Sherwin-Williams posted revenues of $6,116.7 million, up around 1.1% year over year. The figure surpassed the Zacks Consensus Estimate of $6,004.4 million. The rise was primarily attributable to selling price increases in all segments, which had a low-single-digit percentage impact on sales, as well as a slight net gain from acquisitions and divestitures and positive currency swings. This increase was substantially offset by a low-single-digit volume drop caused mostly by the Consumer Brands and Performance Coatings Groups.
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 $3,537.1 million in the third quarter, up around 3.6% year over year. The figure surpassed our estimate of $3,416.9 million. The increase was primarily due to the benefits of higher selling prices, which had a low-single-digit percentage impact on sales.
Net sales in the Consumer Brands Group segment declined 4% year over year to $854.8 million, beating our estimate of $817 million. The decrease was primarily due to the sale of the China architectural business.
Net sales in the Performance Coatings Group declined roughly 1% year over year to $1,724.2 million in the reported quarter, beating our estimate of $1,669.8 million. The fall was primarily due to volume declines in the high single digits, slightly offset by selling price increases, which improved net sales by a low-single-digit percentage.
Financials
The company delivered $2.6 billion in net operating cash during the first nine months of 2023, a 103% increase over the same period in 2022, owing to higher profit and lower working capital requirements. During the first nine months of 2023, SHW returned $1.41 billion in cash to its shareholders in the form of dividends and repurchases of 3.8 million shares. The company had remaining authorization to buy 41.4 million shares of its common stock through open market purchases as of Sep 30, 2023.
Outlook
The company forecasts its consolidated net sales growth in the fourth quarter of 2023 to be up or down in the low single digits compared to the fourth quarter of 2022. The company raised its net income per share projection for full-year 2023. It expects full-year net income per share to be in the range of $9.21 to $9.41 per share, up from $8.46-$8.86 expected previously. This includes 80 cents per share in acquisition-related amortization expense and 9 cents per share in net expense linked to the Restructuring Plan. Full-year 2023 adjusted net income per share is now estimated to be in the range of $10.10 to $10.30 per share, up from $9.30 to $9.70 expected earlier.
Price Performance
Shares of Sherwin-Williams have gained 12.3% in the past year compared with a 10.6% rise of the industry.
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Zacks Rank & Key Picks
Sherwin-Williams currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Koppers Holdings Inc. KOP and The Andersons Inc. ANDE.
Equinox has a projected earnings growth rate of 90% for the current year. It currently carries a Zacks Rank #1 (Strong Buy). Equinox delivered a trailing four-quarter earnings surprise of roughly 18.1%, on average. The stock is up around 38.5% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Koppers has a projected earnings growth rate of 7.5% for the current year. It currently carries a Zacks Rank #2 (Buy). Koppers delivered a trailing four-quarter earnings surprise of roughly 21.7%, on average. The stock is up around 50.5% in a year.
Andersons currently carries a Zacks Rank #2. The stock has gained roughly 39.1% in the past year. ANDE beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average.
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