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Sherwin-Williams (SHW) Beats Earnings & Sales Estimates in Q4

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The Sherwin-Williams Company (SHW - Free Report) logged earnings (as reported) of $4.46 per share in fourth-quarter 2020, up 67.7% from $2.66 in the year-ago quarter.

Barring one-time items, adjusted earnings in the reported quarter were $5.09 per share, which topped the Zacks Consensus Estimate of $4.85.

Sherwin-Williams posted revenues of $4,488.8 million, up 9.1% year over year. The figure also beat the Zacks Consensus Estimate of $4,342.5 million.

The SherwinWilliams Company Price, Consensus and EPS Surprise

 

The SherwinWilliams Company Price, Consensus and EPS Surprise

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

 

Segmental Review

The Americas Group segment registered net sales of $2.58 billion in the fourth quarter, up 9% year over year. The upside was mainly owing to DIY (do-it-yourself) and residential repaint businesses that, which delivered strong double-digit growth, and new residential paint that delivered high-single digit growth.

Net sales in the Consumer Brands Group segment increased 13.6% year over year to $612.8 million. Weak results in Asia business were more than offset by strong North American DIY business.

Net sales in the Performance Coatings Group rose 7.3% year over year to $1.3 billion in the reported quarter. The upside was mainly driven by double-digits growth in coil, industrial wood and packaging businesses. Strong recovery was witnessed in the general industrial business in the quarter, delivering high single digit growth. The automotive business had a more modest growth, as miles driven were dismal.

FY20 Results

Earnings (as reported) for full-year 2020 were $22.08 per share compared with $16.49 per share a year ago. Net sales increased 2.6% to roughly $18.4 billion.

Financials and Shareholder Returns

At the end of the fourth quarter, Sherwin-Williams had cash and cash equivalents of $226.6 million, up 40% year over year. Long-term debt increased 2.7% year over year to $8,266.9 million.

The company purchased 3,900,000 shares of its common stock in 2020. It had remaining authorization to purchase 4.55 million shares through open market purchases.

Outlook

Sherwin-Williams expects demand for North American new residential and residential repaint to remain strong. The commercial end market is expected to stay choppy while the DIY business is likely to face challenging comparisons. The industrial business is expected to be in the best position and industrial demand would is forecast to improve moving ahead.

The consolidated net sales for the first quarter of 2021 are projected to increase high single digits compared with prior-year quarter’s levels. For 2021, it is expected to increase mid-to-high single digits. The company expects adjusted earnings per share for 2021 to be between $26.40 and $27.20 compared with $24.58 per share in 2020.

Price Performance

Shares of Sherwin-Williams have gained 21.5% in the past year compared with 20% rise of the industry.

Zacks Rank & Key Picks

Sherwin-Williams currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Fortescue Metals Group Limited (FSUGY - Free Report) , BHP Group (BHP - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .

Fortescue has a projected earnings growth rate of 75.5% for the current fiscal. The company’s shares have surged around 133% in a year. It currently sports a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BHP has an expected earnings growth rate of 59.5% for the current fiscal. The company’s shares have gained around 30.6% in the past year. It currently flaunts a Zacks Rank #1.

Impala has an expected earnings growth rate of 189.4% for the current fiscal. The company’s shares have rallied around 37% in the past year. It currently sports a Zacks Rank #1.

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