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Sherwin-Williams Tumbles on Lower-Than-Expected Profit View

Anindya Barman

Shares of the Sherwin-Williams Company SHW got hit yesterday after the company warned that its earnings for 2018 will fall short of its expectations. The paints and coatings giant released its preliminary unaudited sales and earnings figures for the fourth quarter and full-year 2018 yesterday.

The company now sees earnings for 2018 to be roughly $11.15 per share, below its guidance of $13.85 to $14.00 per share issued in October 2018. The company cited lower fourth-quarter sales and non-operating expenses (expected to be recognized in the fourth quarter) as main reasons for the lower-than-expected full-year earnings.  

Sherwin-Williams also expects adjusted earnings for full-year 2018 to be roughly $18.53, also lower than its October guidance of $19.05 to $19.20 per share. Adjusted earnings for 2018 represent an increase of roughly 23% on a year over year basis.

Adjusted earnings for 2018 exclude acquisition-related costs of $4.66 per share and other non-operating expenses of $2.72 per share. Analysts polled by Zacks currently expect earnings of $19.11 per share for 2018.

The company noted that its consolidated net sales for the fourth quarter rose around 2% year over year, well short of its earlier guidance of a mid-single digit percentage increase. Preliminary net sales from stores in the United States and Canada (open for more than 12 calendar months) went up roughly 3% in the quarter.

The Cleveland-based company’s shares tanked 4.1% to close at $381.44 yesterday on the profit warning. Shares of Sherwin-Williams are down 10.7% over a year against 5.1% decline recorded by its industry.


Sherwin-Williams said that its fourth-quarter performance was disappointing across the board compared with its earlier expectations. The weaker-than-expected sales growth in the quarter was largely due to weak sales growth by its North American stores in October and November, the company noted. The company also witnessed lower-than-expected sales for its Consumer Brands and Performance Coatings Groups in the quarter.

The company is slated to report its full earnings results and guidance for 2019 on Jan 31.

The Sherwin-Williams Company Price and Consensus


The Sherwin-Williams Company Price and Consensus | The Sherwin-Williams Company Quote

Zacks Rank & Stocks to Consider

Sherwin-Williams currently carries a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks worth considering in the basic materials space include Ingevity Corporation NGVT, Quaker Chemical Corporation KWR, Israel Chemicals Ltd. ICL.

Ingevity has an expected earnings growth rate of 21.5% for the current year and carries a Zacks Rank #1. Its shares have gained 16% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quaker Chemical has an expected earnings growth rate of 21.1% for the current year and carries a Zacks Rank #2 (Buy). Its shares have gained 18% in the past year.

Israel Chemicals has an expected earnings growth rate of 5.4% for the current year and carries a Zacks Rank #2. The company’s shares have rallied 30% over the past year.

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