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Why Is Sherwin-Williams (SHW) Up 6.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Sherwin-Williams (SHW - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sherwin-Williams due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Sherwin-Williams Beats Earnings & Sales Estimates in Q1

Sherwin-Williams logged earnings (as reported) of $1.51 per share in first-quarter 2021, up 31.3% from $1.15 in the year-ago quarter.

Barring one-time items, adjusted earnings in the reported quarter were $2.06 per share, which topped the Zacks Consensus Estimate of $1.65.

Sherwin-Williams posted revenues of $4,656 million, up 12.3% year over year. The figure also beat the Zacks Consensus Estimate of $4,536.6 million.

Segmental Review

The Americas Group segment registered net sales of $2.5 billion in the first quarter, up 8.6% year over year. The upside was mainly owing to higher residential repaint, new residential and DIY (do-it-yourself) paint sales as well as higher selling prices.

Net sales in the Consumer Brands Group segment increased 25% year over year to $778.1 million. The increase in sales was primarily driven by higher volume sales to most of the group consumers and a rise in selling price.

Net sales in the Performance Coatings Group rose 12.9% year over year to around $1.4 billion in the reported quarter. The upside was mainly driven by higher sales volumes in most end markets served and higher selling prices.

Financials and Shareholder Returns

At the end of the first quarter, Sherwin-Williams had cash and cash equivalents of $314.7 million, up 31.9% year over year. Long-term debt declined 5.1% year over year to $7,862.4 million.

The company repurchased 3.3 million shares of its common stock in the first quarter. It had remaining authorization to repurchase 55.35 million shares through open market purchases at the end of the quarter.

Outlook

The company expects consolidated net sales to increase mid-to-high teens in the second quarter. For 2021, it is expected to increase mid-to-high single digits. The company also expects adjusted earnings per share for 2021 to be between $8.80 and $9.07.



 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Sherwin-Williams has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sherwin-Williams has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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