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What's in Store for Sherwin-Williams' (SHW) Q3 Earnings?

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The Sherwin-Williams Company (SHW - Free Report) is set to release third-quarter 2022 results before market opens on Oct 25. The company’s performance is expected to reflect strong domestic demand as well as pricing and cost-control initiatives. However, it is likely to have faced headwinds from weak demand in China and Europe, raw material availability and logistics and transportation issues.

The company beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missed twice. For this timeframe, it delivered a negative earnings surprise of 2.4%, on average. The company posted a negative earnings surprise of around 14.2% in the last-reported quarter.

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 +0.43%. The Zacks Consensus Estimate for the third quarter is currently pegged at $2.60. Our estimate for the quarter is $2.64. 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?

The Zacks Consensus Estimate for Sherwin-Williams’ third-quarter total sales is currently pegged at $5,807 million, suggesting a 12.8% rise from the year-ago quarter’s figure. Our estimate for the quarter is $5,847.9 million.

The consensus estimate for net sales in The Americas Group segment currently stands at $3,468 million, indicating an increase of 16.9% year over year. Our estimate for the quarter is $3,471.4 million.

The Zacks Consensus Estimate for net sales in the Consumer Brands Group segment is currently pegged at $659 million, suggesting a rise of 1.9% from the year-ago quarter’s tally. Our estimate for the quarter is $659.6 million.

The consensus estimate for net sales in the Performance Coatings Group segment is currently at $1,687 million, calling for a rise of 10% year over year. Our estimate for the quarter is $1,716.4 million.

Some Factors to Watch Out For

Sherwin-Williams is expected to have benefited from favorable demand in domestic markets in the third quarter. It is likely to have witnessed continued strong professional architectural demand in The Americas Group unit. The company is also 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.

However, the company is expected to have faced headwinds from raw material availability and logistics constraints and cost inflation. Raw material availability associated with the pandemic is likely to have affected performance, especially in The Americas Group. Raw material pricing is likely to have been high in the September quarter. SHW is also likely to have been affected by higher labor and transportation costs.

Sherwin-Williams is also expected to have been challenged by weaker DIY demand in North America in the third quarter. It is also likely to have witnessed softer demand in Europe due to the sluggish macroeconomic environment. Moreover, lack of meaningful recovery in China following the lifting of pandemic-led restrictions is also expected to have affected the company.

 

The SherwinWilliams Company Price and EPS Surprise

 

The SherwinWilliams Company Price and EPS Surprise

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

 

Stocks That Warrant a Look

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

Albemarle Corporation (ALB - Free Report) , scheduled to release earnings on Nov 2, has an Earnings ESP of +8.13% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Albemarle’s third-quarter earnings has been revised 9% upward in the past 60 days. The Zacks Consensus Estimate for ALB’s earnings for the quarter is pegged at $6.81.

Koppers Holdings Inc. (KOP - Free Report) , expected to release earnings on Nov 3, has an Earnings ESP of +2.28% and carries a Zacks Rank #2.

The Zacks Consensus Estimate for Koppers’ third-quarter earnings has been revised 2.6% upward in the past 60 days. The consensus estimate for KOP’s earnings for the quarter is currently pegged at $1.17.

FMC Corporation (FMC - Free Report) , scheduled to release earnings on Nov 1, has an Earnings ESP of +0.30%.

The Zacks Consensus Estimate for FMC' earnings for the third quarter is currently pegged at $1.11. FMC currently carries a Zacks Rank #3.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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