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The Sherwin-Williams Company (SHW - Free Report) logged net income from continuing operations of $316.6 million or $3.33 per share for the third quarter of 2017, down roughly 18.4% from $386.7 million or $4.08 recorded a year ago. The bottom line was adversely impacted by higher raw material costs, lost sales and recovery expenses resulting from natural disasters.
Earnings, barring one-time items, came in at $4.75 per share, beating the Zacks Consensus Estimate of $4.70. The company recorded charges of $1.42 per share for acquisition-related costs.
Sherwin-Williams recorded net sales of $4,507 million in the quarter, marking a 37.4% year-over-year rise. Revenues also topped the Zacks Consensus Estimate of $4,386.4 million. Sales from stores (which remain open for more than 12 calendar months) in the United States and Canada rose around 5.2% in the quarter.
Sherwin-Williams Company (The) Price, Consensus and EPS Surprise
The Americas Group unit registered net sales of $2.54 billion in the reported quarter, up around 6.5% on a year over year comparison basis. Revenues were driven by increased architectural paint sales volume in most end markets and higher selling prices, partly offset by the impact of natural disasters.
Net sales of the Consumer Brands Group unit went up 81.6% to $723.3 million, driven by the addition of Valspar sales since June, partly masked by reduced volume sales to most of the unit’s retail customers. Valspar sales increased the division’s net sales by around 84.4% in the quarter.
Net sales from the Performance Coatings Group jumped 150.8% to $1.24 million in the quarter owing to inclusion of Valspar sales, increased paint sales volume and higher selling prices. Valspar sales contributed roughly 148.7% to the segment’s net sales in the quarter.
Financials and Shareholder Returns
Sherwin-Williams made no open market purchases of its common stock during the nine months ended Sep 30, 2017. At the end of the third quarter, it had $208 million cash in hand, which it plans to use to fund operations and reduce debt. The company’s operating cash increased to $1.26 billion in the first nine months of 2017.
Outlook
Sherwin-Williams announced that the Valspar integration plans and synergy progress is in line with its expectations, as the company remain focused on strengthening performance of core businesses and newly acquired businesses. The company has also implemented appropriate pricing actions to offset the impact of increasing raw material costs.
Sherwin-Williams projects mid-to-high single digit percentage increase in net sales, year over year for the fourth quarter of 2017. The company expects earnings per share in the fourth quarter to be in the range of $1.97-$2.27, compared with $2.15 earned in the fourth quarter of 2016. The projected fourth-quarter earnings per share includes a 98 cents charge associated with the Valspar acquisition.
For full-year 2017, Sherwin-Williams projects mid-single digit percentage increase in net sales from 2016. It also sees incremental sales from the Valspar buyout to be roughly $2.5 billion for the year. At this level, the company now expects earnings per share for the year to be in the range of $11.20-$11.50, compared with $11.99 earned in 2016. The guidance includes a $3.21 per share charge related to the Valspar acquisition.
Price Performance
Shares of Sherwin-Williams have moved up 9.8% in the last three months, outperforming the 7.9% growth recorded by its industry.
Zacks Rank & Key Picks
Sherwin-Williams currently carries a Zacks Rank #3 (Hold).
Ingevity has an expected long-term earnings growth rate of 12%.
Koppers has an expected long-term earnings growth rate of 18%.
FMC has an expected long-term earnings growth rate of 11.3%.
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Sherwin-Williams (SHW) Tops Q3 Earnings & Sales Estimates
The Sherwin-Williams Company (SHW - Free Report) logged net income from continuing operations of $316.6 million or $3.33 per share for the third quarter of 2017, down roughly 18.4% from $386.7 million or $4.08 recorded a year ago. The bottom line was adversely impacted by higher raw material costs, lost sales and recovery expenses resulting from natural disasters.
Earnings, barring one-time items, came in at $4.75 per share, beating the Zacks Consensus Estimate of $4.70. The company recorded charges of $1.42 per share for acquisition-related costs.
Sherwin-Williams recorded net sales of $4,507 million in the quarter, marking a 37.4% year-over-year rise. Revenues also topped the Zacks Consensus Estimate of $4,386.4 million. Sales from stores (which remain open for more than 12 calendar months) in the United States and Canada rose around 5.2% in the quarter.
Sherwin-Williams Company (The) Price, Consensus and EPS Surprise
Sherwin-Williams Company (The) Price, Consensus and EPS Surprise | Sherwin-Williams Company (The) Quote
Segment Review
The Americas Group unit registered net sales of $2.54 billion in the reported quarter, up around 6.5% on a year over year comparison basis. Revenues were driven by increased architectural paint sales volume in most end markets and higher selling prices, partly offset by the impact of natural disasters.
Net sales of the Consumer Brands Group unit went up 81.6% to $723.3 million, driven by the addition of Valspar sales since June, partly masked by reduced volume sales to most of the unit’s retail customers. Valspar sales increased the division’s net sales by around 84.4% in the quarter.
Net sales from the Performance Coatings Group jumped 150.8% to $1.24 million in the quarter owing to inclusion of Valspar sales, increased paint sales volume and higher selling prices. Valspar sales contributed roughly 148.7% to the segment’s net sales in the quarter.
Financials and Shareholder Returns
Sherwin-Williams made no open market purchases of its common stock during the nine months ended Sep 30, 2017. At the end of the third quarter, it had $208 million cash in hand, which it plans to use to fund operations and reduce debt. The company’s operating cash increased to $1.26 billion in the first nine months of 2017.
Outlook
Sherwin-Williams announced that the Valspar integration plans and synergy progress is in line with its expectations, as the company remain focused on strengthening performance of core businesses and newly acquired businesses. The company has also implemented appropriate pricing actions to offset the impact of increasing raw material costs.
Sherwin-Williams projects mid-to-high single digit percentage increase in net sales, year over year for the fourth quarter of 2017. The company expects earnings per share in the fourth quarter to be in the range of $1.97-$2.27, compared with $2.15 earned in the fourth quarter of 2016. The projected fourth-quarter earnings per share includes a 98 cents charge associated with the Valspar acquisition.
For full-year 2017, Sherwin-Williams projects mid-single digit percentage increase in net sales from 2016. It also sees incremental sales from the Valspar buyout to be roughly $2.5 billion for the year. At this level, the company now expects earnings per share for the year to be in the range of $11.20-$11.50, compared with $11.99 earned in 2016. The guidance includes a $3.21 per share charge related to the Valspar acquisition.
Price Performance
Shares of Sherwin-Williams have moved up 9.8% in the last three months, outperforming the 7.9% growth recorded by its industry.
Zacks Rank & Key Picks
Sherwin-Williams currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Ingevity Corporation (NGVT - Free Report) , Koppers Holdings Inc. (KOP - Free Report) and FMC Corporation (FMC - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Ingevity has an expected long-term earnings growth rate of 12%.
Koppers has an expected long-term earnings growth rate of 18%.
FMC has an expected long-term earnings growth rate of 11.3%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>