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

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The Sherwin-Williams Company SHW is set to release second-quarter 2022 results on Jul 27, before market open. The company’s performance is expected to reflect strong demand as well as pricing and cost-control initiatives. Raw material availability and logistics and transportation issues are likely to have been a headwind.

The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, while missing the same twice. The company has a trailing four-quarter earnings surprise of 0.9%, on average. It posted an earnings surprise of 4.6% in the last reported quarter.

Sherwin-Williams’ shares have declined 10.2% in the past year compared with an 11.9% fall of the industry.

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

What do the Estimates Indicate?

The Zacks Consensus Estimate for Sherwin-Williams’ second-quarter total sales is currently pegged at $5,990 million, suggesting an 11.3% rise from the year-ago quarter’s figure.

The consensus estimate for net sales in The Americas Group segment is currently pegged at $3,394 million, indicating an increase of 9.7% year over year.

The Zacks Consensus Estimate for net sales in the Consumer Brands Group segment is currently pegged at $861 million, suggesting a rise of 17.6% from the year-ago quarter’s tally.

The consensus estimate for net sales in the Performance Coatings Group segment is currently at $1,762 million, calling for a rise of 13.3% year over year.

Some Factors to Watch Out For

Sherwin-Williams is expected to have benefited from favorable demand in domestic markets in the second quarter. It is likely to have witnessed strong architectural sales across professional end markets, driven by continued strength in residential repaint, commercial and property maintenance and selling price increases.

The company is likely to have benefited from higher sales in the Performance Coatings Group, driven by healthy sales volumes and pricing actions.

Sherwin-Williams’ cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are expected to have provided margin benefits in the quarter to be reported.

It is expected to have faced headwinds from raw material availability and logistics constraints and cost inflation. Raw material availability associated with the pandemic is likely to have affected performance, especially in The Americas Group. Raw material pricing is likely to have been high in the second quarter. SHW is also likely to have been affected by higher labor and transportation costs due to the pandemic.

Zacks Model

Our proven model does not conclusively predict 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 earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Sherwin-Williams is -2.06%. The Zacks Consensus Estimate for second-quarter earnings is currently pegged at $2.80. 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 (Hold).

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 in the basic materials space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:

Albemarle Corporation ALB, scheduled to release earnings on Aug 3, has an Earnings ESP of +11.9% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Albemarle’s second-quarter earnings has been revised 21.5% upward in the past 60 days. The consensus estimate for ALB’s earnings for the quarter is currently pegged at $2.94.

Cabot Corporation CBT, slated to release earnings on Aug 8, has an Earnings ESP of +0.16% and sports a Zacks Rank #1.

The consensus estimate for Cabot’s fiscal third-quarter earnings has been revised 1% upward in the past 60 days. The Zacks Consensus Estimate for CBT’s earnings for the quarter is pegged at $1.53.

Ashland Global Holdings Inc. ASH, scheduled to release earnings on Jul 26, has an Earnings ESP of +11.57% and carries a Zacks Rank #2.

The Zacks Consensus Estimate for Ashland's fiscal third-quarter earnings has been revised 5.9% upward in the past 60 days. The consensus estimate for ASH’s earnings for the quarter is currently pegged at $1.69.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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The SherwinWilliams Company (SHW) : Free Stock Analysis Report
 
Ashland Global Holdings Inc. (ASH) : Free Stock Analysis Report
 
Albemarle Corporation (ALB) : Free Stock Analysis Report
 
Cabot Corporation (CBT) : Free Stock Analysis Report
 
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