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What's in Store for Sherwin-Williams (SHW) in Q4 Earnings?

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The Sherwin-Williams Company (SHW - Free Report) is set to release fourth-quarter 2020 results before market opens on Jan 28. The company’s results are expected to reflect strength in architectural paint markets in North America and a recovery in its industrial businesses.

The company beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters while missed once. For this timeframe, it delivered an earnings surprise of 7.5%, on average. The company posted an earnings surprise of 6.3% in the last-reported quarter.

Sherwin-Williams’ shares have gained 25.3% in the past year compared with the industry’s 23.7% growth.

 

 

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

 

What do the Estimates Indicate?

Sherwin-Williams expects consolidated net sales for the fourth quarter to increase 3-7% year over year.

The Zacks Consensus Estimate for fourth-quarter total sales is currently pegged at $4,343 million, which suggests an increase of 5.6% from the year-ago quarter’s figure.

The consensus estimate for net sales in the Americas Group segment currently stands at $2,482 million, which indicates a rise of 5% year over year.

The Zacks Consensus Estimate for net sales in the Consumer Brands Group segment is currently pegged at $629 million, which suggests an increase of 16.7% from the year-ago quarter’s tally.

Moreover, the consensus estimate for net sales in the Performance Coatings Group segment currently stands at $1,222 million, which calls for a rise of 0.9% year over year.

Some Factors to Watch Out For

The company’s fourth-quarter results are likely to reflect strong demand for architectural coatings. It has been witnessing higher demand for architectural DIY (Do It Yourself) paint in North America. The company saw strong demand for architectural coatings in the third quarter, driven by new residential, DIY and residential repaint units. The momentum is likely to have continued in the fourth quarter.

The company’s Performance Coatings Group segment also recovered in the third quarter following a slowdown due to weaker end market demand amid the coronavirus pandemic. The rebound came on the back of improved demand in most businesses and regions. The company is seeing positive momentum in its industrial businesses, which is likely to have aided performance in the December quarter.

Moreover, the company’s cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement actions are also likely to have provided margin benefits in the quarter to be reported.

However, the company remains impacted by weakness across certain economies. Although domestic demand of architectural paint has been healthy, it remains somewhat weak outside North America due to sluggish market conditions amid the pandemic. As such, some impacts of softness in non-domestic regions are likely to get reflected in fourth-quarter results.

 

The SherwinWilliams Company Price and EPS Surprise

 

The SherwinWilliams Company Price and EPS Surprise

The SherwinWilliams Company price-eps-surprise | The SherwinWilliams Company Quote

 

Zacks Model

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

Earnings ESP: Earnings ESP for Sherwin-Williams is -0.96%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at $4.85. 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.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

LyondellBasell Industries N.V. (LYB - Free Report) , scheduled to release earnings on Jan 29, has an Earnings ESP of +5.36% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese Corporation (CE - Free Report) , scheduled to release earnings on Jan 28, has an Earnings ESP of +2.38% and carries a Zacks Rank #2.

Eastman Chemical Company (EMN - Free Report) , scheduled to release earnings on Jan 28, has an Earnings ESP of +16.17% and carries a Zacks Rank #3.

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