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Sherwin-Williams (SHW) to Post Q2 Earnings: What's in Store?

Zacks Equity Research
·5 min read

The Sherwin-Williams Company SHW is set to release second-quarter 2020 results ahead of the bell on Jul 28. The company’s second-quarter results are expected to reflect the benefits from a favorable demand environment in North America. However, soft demand in non-domestic markets is likely to have affected its performance.

The company delivered an earnings surprise of 1.3%, on average, over the trailing four quarters. It posted an earnings surprise of 1.8% in the last reported quarter.

Sherwin-Williams’ shares have gained 25.1% in the past year compared with the industry’s 22.5% growth.


 

Let’s see how things are shaping up for this announcement.

Zacks Model

Our proven model predicts an earnings beat for Sherwin-Williams this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for Sherwin-Williams is +0.82%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at $5.69. 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.

What do the Estimates Indicate?

The company, last month, increased its net sales outlook for the second quarter. It now projects consolidated net sales for the quarter to decline by a mid-single-digit percentage year over year, up from a year-over-year dip in the low to mid-teens percentage expected earlier.

Sherwin-Williams anticipates second-quarter net sales for the Americas Group segment to decline by a high-single-digit percentage compared with the previous outlook of a decrease of low-double-digit to mid-teens percentage.

For the Consumer Brands Group unit, the company sees net sales for the quarter to be substantially above the high end of the previously expected increase by a high-single-digit to low-double-digit percentage.

The company also expects second-quarter net sales for the Performance Coatings Group segment to be in line with the earlier outlook of a decline by a high-teens percentage.

The Zacks Consensus Estimate for second-quarter total sales for Sherwin-Williams is currently pegged at $4,556 million, which suggests a decline of 6.6% from the year-ago quarter’s figure.

The Zacks Consensus Estimate for net sales in the Americas Group segment currently stands at $2,489 million, which indicates a decline of 9.7% year over year.

The consensus mark for net sales in the Consumer Brands Group segment is currently pegged at $950 million, which suggests an increase of 18.2% from the year-ago quarter’s tally.

Moreover, the Zacks Consensus Estimate for net sales in the Performance Coatings Group segment currently stands at $1,082 million, which calls for a decline of 17.8% year over year.

Some Factors to Watch For

The company’s second-quarter results are likely to have benefited from sustained strength in architectural paint markets in North America. Sherwin-Williams is seeing strong demand in its domestic end-use markets and remains committed to expand its retail operations. Higher architectural paint sales volumes are likely to have supported results in the Americas Group segment in the quarter to be reported.

Sherwin-Williams last month stated that, in the Americas Group, it quickly adapted to the coronavirus outbreak by implementing curbside pickup in stores, utilizing its fleet of more than 3,000 delivery vehicles, and leveraging its e-commerce platform.

In the Consumer Brands Group unit, the company benefited from strong demand from retail partners in the second quarter. However, demand was variable by end market and geography in the Performance Coatings Group unit in the quarter.

Soft demand in non-domestic markets is likely to have hurt sales in Performance Coatings Group in the second quarter. The coronavirus pandemic is expected to have affected demand in non-domestic regions in the quarter to be reported.

The SherwinWilliams Company Price and EPS Surprise

The SherwinWilliams Company Price and EPS Surprise
The SherwinWilliams Company Price and EPS Surprise

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

 

Stocks That Warrant a Look

Here are some companies that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Kinross Gold Corporation KGC, slated to release earnings on Jul 29, has an Earnings ESP of +5.13% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newmont Corporation NEM, slated to release earnings on Jul 30, has an Earnings ESP of +10.02% and carries a Zacks Rank #3.

Barrick Gold Corporation GOLD, scheduled to release earnings on Aug 10, has an Earnings ESP of +0.90% and carries a Zacks Rank #3.

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The SherwinWilliams Company (SHW) : Free Stock Analysis Report
 
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Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
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