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Sherwin-Williams (SHW) to Post Q1 Earnings: What's in Store?

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The Sherwin-Williams Company (SHW - Free Report) is set to release first-quarter 2021 results on Apr 27 before market opens. The company’s results are expected to reflect strong demand in North American new residential and residential repaint as well as aggressive cost-control initiatives.

The company has a trailing four-quarter earnings surprise of 9.44%, on average. It posted an earnings surprise of 4.9% in the last reported quarter.

Sherwin-Williams’ shares have gained 59.9% in the past year compared with 57.1% surge of the industry.

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

Zacks Model

Our proven model predicts an earnings beat for Sherwin-Williams this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for Sherwin-Williams is +0.56%. The Zacks Consensus Estimate for first-quarter earnings is currently pegged at $1.65. 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.

What do the Estimates Indicate?

Sherwin-Williams expects consolidated net sales for the first quarter to increase high single digits, which suggests an increase from the year-ago quarter’s levels.

The Zacks Consensus Estimate for first-quarter total sales is currently pegged at $4,537 million, which suggests an increase of 9.4% from the year-ago quarter’s figure.

The consensus estimate for net sales in the Americas Group segment is currently pegged at $2,490 million, which indicates a rise of 8% year over year.

The Zacks Consensus Estimate for net sales in the Consumer Brands Group segment is currently pegged at $710 million, which suggests an increase of 14.1% from the year-ago quarter’s tally.

Moreover, the consensus estimate for net sales in the Performance Coatings Group segment is currently stands at $1,297 million, which calls for a rise of 6.5% year over year.

Some Factors to Watch Out For

Sherwin-William’s first-quarter performance is likely to have been driven by strong demand in North American new residential and residential repaint businesses.

Moreover, the company is likely to have benefited from improved demand in industrial business in the first quarter. Sherwin-Williams’ aggressive cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are also expected to have provided margin benefits in the quarter to be reported.

The company has been focused on capturing a larger share of its end-markets, as is evident in the increasing number of retail stores.

However, the company is likely to have faced headwind from softness in commercial end market. It also remains impacted by weakness across certain economies. Although domestic demand of architectural paint has been healthy, it is somewhat weak outside North America due to sluggish market conditions, amid the pandemic. As such, the impacts of softness in non-domestic regions are likely to get reflected in its first-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

 

Other Stocks That Warrant a Look

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

The Mosaic Company (MOS - Free Report) , scheduled to release earnings on May 3, has an Earnings ESP of +2.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AdvanSix Inc. (ASIX - Free Report) , scheduled to release earnings on Apr 30, has an Earnings ESP of +7.69% and carries a Zacks Rank #1.

CF Industries Holdings, Inc. (CF - Free Report) , scheduled to release earnings on May 5, has an Earnings ESP of +26.13% and carries a Zacks Rank #3.

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