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Sherwin-Williams (SHW) to Post Q2 Earnings: What's in Store?

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The Sherwin-Williams Company (SHW - Free Report) is set to release second-quarter 2021 results on Jul 27, before market open. The company’s performance is expected to reflect high sales in The Americas Group and Performance Coatings group segments as well as cost-control initiatives. However, higher raw material costs are likely to have been a headwind.

The company has a trailing four-quarter earnings surprise of 15.22%, on average. It posted an earnings surprise of 24.9% in the last reported quarter.

Sherwin-Williams’ shares have gained 34.8% in the past year compared with 31.3% surge of the industry.

Zacks Investment Research
Image Source: Zacks Investment Research

 

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 +4.42%. The Zacks Consensus Estimate for second-quarter earnings is currently pegged at $2.68. 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

What do the Estimates Indicate?

Sherwin-Williams expects second-quarter consolidated net sales to be up a high-teens percentage compared with previous guidance of mid-to-high teens percentage.

The Zacks Consensus Estimate for second-quarter total sales is currently pegged at $5,385 million, which suggests an increase of 17% from the year-ago quarter’s figure.

The consensus estimate for net sales in The Americas Group segment is currently pegged at $3,094 million, which indicates a rise of 22.6% year over year.

The Zacks Consensus Estimate for net sales in the Consumer Brands Group segment is currently pegged at $778 million, which suggests a fall of 20.6% from the year-ago quarter’s tally.

Moreover, the consensus estimate for net sales in the Performance Coatings Group segment is currently at $1,492 million, which calls for a rise of 35.6% year over year.

Some Factors to Watch Out For

Sherwin-Williams is expected to have benefited from strong sales in The Americas Group and Performance Coatings group segments in the second quarter. The performance is likely to have been driven by strong demand in architectural and industrial end markets with an improvement in commercial and property management.

The company is likely to have benefited from strong demand in North American new residential and residential repaint businesses in the second quarter.

Sherwin-Williams’ 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 is also focused on capturing a larger share of its end-markets, as evident in the increasing number of retail stores.

However, it is expected to have faced headwind from persistent raw material cost inflation. It is implementing additional price increases across all its segments in the wake of the cost hike.

The Wattyl divestiture might have impacted the company’s sales. The divestment is expected to have hurt sales in the Consumer Brands unit in the quarter.

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 other companies in the basic materials space you may want to consider as our model shows that they also 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 Jul 30, has an Earnings ESP of +15.13% and sports a Zacks Rank #1.

Celanese Corporation (CE - Free Report) , scheduled to release earnings on Jul 22, has an Earnings ESP of +8.38% and carries a Zacks Rank #2.

Eastman Chemical Company (EMN - Free Report) , scheduled to release earnings on Aug 3, has an Earnings ESP of +2.11% and carries a Zacks Rank #3.