What's in the Cards for Sherwin-Williams (SHW) in Q3 Earnings?
The Sherwin-Williams Company SHW is scheduled to release third-quarter 2023 results before the opening bell on Oct 24.
The company beat the Zacks Consensus Estimate for earnings in all of the last four quarters, the average surprise being 11%. It pulled off an earnings surprise of 21.4% in the last reported quarter.
Sherwin-Williams' shares have risen 18.7% in the past year compared with the industry’s rise of 18.4%.
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What Do the Estimates Say?
The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $6,004 million, suggesting a fall of around 1% from the year-ago reported number.
Our estimate for net sales for SHW’s Consumer Brands Group for the third quarter is $817 million, implying a decline of 8.3% year over year. We expect sales for its Performance Coatings Group to be $1,669.8 million, which indicates a 4.1% decline. Our estimate for SHW’s Paint Stores Group is $3,416.9 million, which suggests an increase of 0.1% from the year-ago reported number.
Factors to Watch
Sherwin-Williams is expected to have benefited from strong demand and its pricing actions in the third quarter. Sherwin-Williams is witnessing robust demand in its domestic markets, particularly in the auto refinishing sector across various regions. This increased demand is providing the company with better visibility for the third quarter compared to the second quarter. Its installations in North America have experienced a significant double-digit growth this year, which is expected to have positively impacted the company's future sales performance.
The company has been consistently expanding its retail presence, evident by the impressive 10% growth in sales for the Paint Stores Group in the second quarter. This growth can be attributed to effective pricing strategies and increased sales volume, resulting in a 280 basis point increase in the segment's margin, now at 24.3%. Higher selling prices will likely continue supporting its top line and margins in the September quarter.
Sherwin-Williams is implementing restructuring initiatives to optimize the Consumer Brands Group, Performance Coatings Group, and corporate operations. These efforts are anticipated to generate annual savings of $50-$70 million, with around 75% of the expected benefits realized by the end of 2023 and full implementation expected by the conclusion of 2024. The company’s cost actions are expected to have provided margin benefits in the quarter to be reported.
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 predicts an earnings beat for Sherwin-Williams this season. 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.
Earnings Beat: Earnings ESP for Sherwin-Williams is +2.89%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at $2.77. 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 Zacks Rank #3.
Stocks That Warrant a Look
Here are some companies in the construction space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
Aspen Aerogels, Inc. ASPN, slated to release its third-quarter earnings on Nov 1, has an Earnings ESP of +9.30% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for ASPN’s third-quarter earnings per share is currently pegged at a loss of 29 cents.
KBR, Inc. KBR, scheduled to release third-quarter earnings on Nov 2, has an Earnings ESP of +6.36%.
The Zacks Consensus Estimate for KBR’s earnings for the third quarter is currently pegged at 73 cents. KBR currently carries a Zacks Rank #2.
Vulcan Materials Company VMC, slated to release earnings on Oct 26, has an Earnings ESP of +1.82% and carries a Zacks Rank #2 at present.
The consensus mark for VMC’s third-quarter earnings is currently pegged at $2.20.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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The Sherwin-Williams Company (SHW) : Free Stock Analysis Report
Vulcan Materials Company (VMC) : Free Stock Analysis Report
KBR, Inc. (KBR) : Free Stock Analysis Report
Aspen Aerogels, Inc. (ASPN) : Free Stock Analysis Report
