The Sherwin-Williams Company ( SHW Quick Quote SHW - Free Report) is set to release fourth-quarter 2021 results on Jan 27, before market open. The company’s performance is expected to reflect strong demand as well as pricing and cost -control initiatives. Raw material availability as well as logistics and transportation issues are likely to have been a headwind.
The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, while missing the same once. The company has a trailing four-quarter earnings surprise of 7.4%, on average. It posted an earnings surprise of 0.97% in the last reported quarter.
Sherwin-Williams’ shares have gained 23.7% in the past year compared with a 17.6% rally of the
industry. Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Indicate?
The Zacks Consensus Estimate for fourth-quarter total sales is currently pegged at $4,762 million, suggesting a 6.1% rise from the year-ago quarter’s figure.
The consensus estimate for net sales in The Americas Group segment is currently pegged at $2,737 million, indicating an increase of 6.3% year over year.
The Zacks Consensus Estimate for net sales in the Consumer Brands Group segment is currently pegged at $526 million, suggesting a fall of 14.2% from the year-ago quarter’s tally.
The consensus estimate for net sales in the Performance Coatings Group segment is currently at $1,498 million, calling for a rise of 15.2% year over year.
Some Factors to Watch Out For
Sherwin-Williams is expected to have benefited from favorable demand in domestic markets in thefourth quarter. It is likely to have witnessed strong architectural sales across professional end markets, driven by continued strength in residential repaint, commercial and property maintenance as well as selling price increases.
The company is likely to have benefited from higher sales in the Performance Coatings Group, driven by healthy sales volumes and pricing actions.
Sherwin-Williams’ cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are expected to have provided margin benefits in the quarter to be reported.
It is expected to have faced headwinds from raw material availability and logistics constraints as well as cost inflation. Raw material availability and labor headwinds associated with the pandemic are likely to have affected performance in The Americas Group. Raw material pricing is likely to have been high in the fourth quarter.
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.
Our proven model does not conclusively predict 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 earnings beat. But that’s not the case here. Earnings ESP: Earnings ESP for Sherwin-Williams is 0.00%. The Zacks Consensus Estimate for fourth-quarter earnings is currently pegged at $1.35. 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 #4 (Sell). 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 these too have the right combination of elements to post an earnings beat this quarter:
Celanese Corporation ( CE Quick Quote CE - Free Report) , scheduled to release earnings on Jan 27, has an Earnings ESP of +2.98% and carries a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Celanese's fourth-quarter earnings has been revised 0.6% upward in the past 60 days. The consensus estimate for CE’s earnings for the quarter is currently pegged at $5.05.
CF Industries Holdings, Inc. ( CF Quick Quote CF - Free Report) , expected to release earnings on Feb 16, has an Earnings ESP of +9.44% and carries a Zacks Rank #2.
The consensus estimate for CF Industries' fourth-quarter earnings has been revised 31.5% upward in the past 60 days. The Zacks Consensus Estimate for CF’s earnings for the quarter is pegged at $3.25.
Methanex Corporation ( MEOH Quick Quote MEOH - Free Report) , scheduled to release earnings on Jan 26, has an Earnings ESP of +0.52% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for Methanex's fourth-quarter earnings has been revised 4.2% upward in the past 60 days. The consensus estimate for MEOH’s earnings for the quarter is currently pegged at $2.56.
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