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Sherwin-Williams (SHW) Earnings & Sales Top Estimates in Q2

Zacks Equity Research
·4 min read

The Sherwin-Williams Company SHW logged earnings (as reported) of $6.48 per share in second-quarter 2020, up roughly 29% from $5.03 in the year-ago quarter.

Barring one-time items, adjusted earnings in the reported quarter were $7.10 per share, which topped the Zacks Consensus Estimate of $5.69.

Sherwin-Williams posted revenues of $4,604 million, down roughly 6% year over year. However, the figure beat the Zacks Consensus Estimate of $4,556.2 million.

The decline in sales is due to the impacts of coronavirus pandemic, which led to weak demand in certain end markets in the Americas Group and the Performance Coatings Group segments. Unfavorable currency translation also hurt sales. These were, in part, offset by increased sales to most of the Consumer Brands Group unit’s retail customers.

The SherwinWilliams Company Price, Consensus and EPS Surprise

 

The SherwinWilliams Company Price, Consensus and EPS Surprise
The SherwinWilliams Company Price, Consensus and EPS Surprise

The SherwinWilliams Company price-consensus-eps-surprise-chart | The SherwinWilliams Company Quote

 

Segmental Review

The Americas Group segment registered net sales of $2.52 billion in the second quarter, down around 8% year over year, as coronavirus impacted demand in most end market segments.

Net sales in the Consumer Brands Group segment climbed roughly 22% year over year to $980.2 million. Increased volume sales to most of the segment’s North American and European retail customers were partly offset by weaker sales in Asia Pacific.

Net sales in the Performance Coatings Group fell nearly 17% year over year to $1.1 billion in the reported quarter. The decline was mainly due to weaker end market demand in most businesses partly resulting from the impacts of the pandemic. Sales were also affected by unfavorable currency swings. These were partly offset by higher sales in the packaging division in all regions.

Financials and Shareholder Returns

At the end of the quarter, Sherwin-Williams had cash and cash equivalents of $188.1 million, up 29% year over year. Long-term debt increased around 15% year over year to $8,289.4 million.

The company purchased 1,700,000 shares of its common stock in the first half of 2020. It had remaining authorization to purchase 6.75 million shares through open market purchases.

Outlook

Moving ahead, Sherwin-Williams envisions demand to improve sequentially in the third quarter with softness continuing in certain end markets in the United States and global environments for the balance of 2020.  The company expects third-quarter consolidated net sales to be up or down low single digits on a year-over-year basis.

The company also raised its net income per share guidance for full-year 2020 to $19.21-$20.71 from its prior view of $16.46-$18.46.

Price Performance

Shares of Sherwin-Williams have gained 22.6% in the past year compared with the industry’s 20.5% rise.

 

 

Zacks Rank & Stocks to Consider

Sherwin-Williams currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the construction space include D.R. Horton, Inc. DHI, Meritage Homes Corporation MTH and Masco Corporation MAS.

D.R. Horton has a projected earnings growth rate of 14.5% for the current year. The company’s shares have rallied around 51% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Meritage Homes has a projected earnings growth rate of 10.4% for the current year. The company’s shares have rallied roughly 57% in a year. It currently carries a Zacks Rank #1.

Masco has an expected earnings growth rate of 6.2% for the current year. The company’s shares have shot up around 37% in the past year. It presently carries a Zacks Rank #1.

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The SherwinWilliams Company (SHW) : Free Stock Analysis Report
 
Masco Corporation (MAS) : Free Stock Analysis Report
 
D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
 
Meritage Homes Corporation (MTH) : Free Stock Analysis Report
 
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