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Sherwin-Williams (SHW) to Post Q3 Earnings: What's in Store?

Zacks Equity Research

The Sherwin-Williams Company SHW is set to release third-quarter 2019 results on Oct 22, before the opening bell. The company’s results will likely reflect the benefits of its cost-control and pricing initiatives as well as a favorable demand environment in North America.

The paint giant delivered a positive earnings surprise of roughly 3.5% in the last reported quarter as it gained from higher paint sales volume across all end markets in North American stores along with higher selling prices.

Sherwin-Williams’ shares have rallied 42.4% so far this year, outperforming its industry’s 39.1% rise.


 

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

What do the Estimates Say?

The Zacks Consensus Estimate for third-quarter total revenues for Sherwin-Williams is currently pegged at $4,820 million, indicating an expected growth of 1.9% from the year-ago quarter’s figure.

The Zacks Consensus Estimate for net sales in the Americas Group segment is currently pegged at $2,812 million, implying an expected growth of roughly 5.5% year over year.

The Zacks Consensus Estimate for net sales in the Consumer Brands Group segment currently stands at $712 million, indicating an expected decline of around 7.7% from the year-ago quarter’s figure.

The Zacks Consensus Estimate for net sales in the Performance Coatings Group segment is currently pegged at $1,311 million, indicating an expected rise of roughly 1.2% year over year.

Factors at Play

In July, Sherwin-Williams said that it expects low-single-digit-percentage increase in net sales year over year for the third quarter. It expects growth in its Americas Group segment to be in the mid-single-digit range in the quarter.

For the Consumer Brands Group segment, Sherwin-Williams envisions sales to decline by high single digit in the third quarter. Sales in the Performance Coatings Group unit have been forecast to rise by low-single-digit percentage.

Favorable demand in North American stores may have continued to drive volumes and sales in the Americas Group division in the third quarter. However, results in the Performance Coatings Group might have reflected relatively softer demand in non-domestic regions, especially Asia and Europe.

In Consumer Brands Group, the divestiture of the Guardsman furniture protection business and continued softness in some retail customers might have hurt third-quarter performance.  

Meanwhile, Sherwin-Williams’ cost-control initiatives, working-capital reductions, supply-chain optimization and productivity improvement are likely to have contributed to its bottom line in the September quarter. Moreover, contributions of the Valspar acquisition and benefits of pricing initiatives are also expected to get reflected on third-quarter results. The company is taking appropriate pricing actions to counter raw material cost inflation. 

The Sherwin-Williams Company Price and EPS Surprise

 

The Sherwin-Williams Company Price and EPS Surprise

The Sherwin-Williams Company price-eps-surprise | The Sherwin-Williams Company Quote

 

Zacks Model

Our proven model does not conclusively predict that Sherwin-Williams is likely to beat the Zacks Consensus Estimate this quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
 
Earnings ESP:
Earnings ESP for Sherwin-Williams is +0.77%. This is because the Most Accurate Estimate is currently pegged at $6.51 while the Zacks Consensus Estimate stands at $6.46. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: Sherwin-Williams carries a Zacks Rank #4 (Sell).  

Stocks to Consider

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:

Agnico Eagle Mines Limited AEM, scheduled to release earnings on Oct 23, has an Earnings ESP of +7.93% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross Gold Corporation KGC, scheduled to release earnings on Nov 6, has an Earnings ESP of +25.93% and carries a Zacks Rank #1.

Newmont Goldcorp Corporation NEM, scheduled to release earnings on Nov 5, has an Earnings ESP of +3.13% and carries a Zacks Rank #2.

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Kinross Gold Corporation (KGC) : Free Stock Analysis Report
 
Newmont Mining Corporation (NEM) : Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
 
The Sherwin-Williams Company (SHW) : Free Stock Analysis Report
 
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