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Sherwin-Williams (SHW) Q4 Earnings Beat, Sales Lag Estimates
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The Sherwin-Williams Company (SHW - Free Report) recorded earnings of $1.48 per share in the fourth quarter of 2022, reflecting a rise of 28.7% from the year-ago quarter's $1.15.
SHW posted adjusted earnings of $1.89 per share, up 41% from the year-ago quarter figure of $1.34. It surpassed the Zacks Consensus Estimate of $1.84.
The company’s net sales in the fourth quarter were $5,230.5 million, which lagged the Zacks Consensus Estimate of $5,244.9 million. Net sales increased around 9.8% from $4,762.1 million reported in the prior-year quarter. The upside was driven by higher selling prices in all segments and increased architectural sales volumes in the Americas Group segment, which were partly mitigated by lower sales volumes in the company’s Consumer Brands Group and Performance Coatings Group outside of North America.
The SherwinWilliams Company Price, Consensus and EPS Surprise
The Americas Group: Net sales from this segment were $3,071.1 million in the fourth quarter, up 15.7% from the year-ago quarter. The increase in sales was primarily due to higher selling prices and higher sales volume for architectural business in most end markets. Profit increased as higher prices and a rise in paint sales volumes were partially offset by high raw materials cost and high SG&A expense in the quarter.
Consumer Brands Group: Net sales from this segment were $551.5 million in the fourth quarter, down 2.4% from the year-ago quarter. High raw materials cost, supply chain disruptions and adverse currency movements drove the profit of this segment down. The segment also faced headwinds from cost incurred due to restructuring and lower sales volume, which were partly offset by higher selling prices and effective cost controls.
Performance Coatings Group: Net sales from this segment were $1,607.4 million in the fourth quarter, up 4.2% from the year-ago quarter. The upside was mainly supported by higher selling prices in all end markets but was partly offset by lower sales volume in APAC and EMEAI regions. Higher raw materials cost and increased costs resulting from supporting sales partly mitigated the rise in segment profits.
FY22 Results
Earnings for full-year 2022 were $7.72 per share compared with $6.98 a year ago. Net sales increased 11.1% year over year to $22,148.9 million.
Financials
At the end of the fourth quarter, Sherwin-Williams had cash and cash equivalents of $198.8 million, up around 20% year over year. Long-term debt increased approximately 11.6% to $9,591 million.
Sherwin-Williams generated $1.92 billion in net operating cash during 2022. The company also repurchased 3.4 million shares of its common stock during the year.
Outlook
Moving ahead, SHW sees a challenging demand environment in 2023. The company expects its architectural and some industrial businesses to remain under pressure due to the slowdown of U.S. housing market. Rising inflation is also expected to dent the company’s performance. Further, the company expects slowing economic conditions in Europe and uncertainties in China due to the pandemic along with the slowdown in the United States, as witnessed in some sectors, to affect its industrial business.
The company expects consolidated net sales growth to be flat to up a mid-single-digit percentage year over year in first-quarter 2023. For full-year 2023, it envisions consolidated net sales to be down a mid-single-digit percentage to flat compared to the year-ago level.
Sherwin-Williams also sees earnings in the range of $6.79-$7.59 per share for full-year 2023. Adjusted earnings have been forecast in the range of $7.95-$8.65 per share for 2023.
Price Performance
SHW’s shares are down 12.7% over a year compared with an 11% fall recorded by its industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Sherwin-Williams currently carries a Zacks Rank #3 (Hold).
Nucor’s shares have gained 61.9% in the past year. The company has a projected earnings growth rate of 21.5% for the current year. NUE topped Zacks Consensus Estimate in all of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 3.9% on average.
Agnico’s shares have gained 24% in the past year. The Zacks Consensus Estimate for AEM’S current-year earnings has been revised 0.4% upward in the past 60 days.
Agnico Eagle beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.4% on average.
FMC’s shares have gained 19.2% in the past year. The company has a projected earnings growth rate of 6.5% for the current year. FMC Corp. outpaced Zacks Consensus Estimate in all of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.9% on average.
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Sherwin-Williams (SHW) Q4 Earnings Beat, Sales Lag Estimates
The Sherwin-Williams Company (SHW - Free Report) recorded earnings of $1.48 per share in the fourth quarter of 2022, reflecting a rise of 28.7% from the year-ago quarter's $1.15.
SHW posted adjusted earnings of $1.89 per share, up 41% from the year-ago quarter figure of $1.34. It surpassed the Zacks Consensus Estimate of $1.84.
The company’s net sales in the fourth quarter were $5,230.5 million, which lagged the Zacks Consensus Estimate of $5,244.9 million. Net sales increased around 9.8% from $4,762.1 million reported in the prior-year quarter. The upside was driven by higher selling prices in all segments and increased architectural sales volumes in the Americas Group segment, which were partly mitigated by lower sales volumes in the company’s Consumer Brands Group and Performance Coatings Group outside of North America.
The SherwinWilliams Company Price, Consensus and EPS Surprise
The SherwinWilliams Company price-consensus-eps-surprise-chart | The SherwinWilliams Company Quote
Segment Highlights
The Americas Group: Net sales from this segment were $3,071.1 million in the fourth quarter, up 15.7% from the year-ago quarter. The increase in sales was primarily due to higher selling prices and higher sales volume for architectural business in most end markets. Profit increased as higher prices and a rise in paint sales volumes were partially offset by high raw materials cost and high SG&A expense in the quarter.
Consumer Brands Group: Net sales from this segment were $551.5 million in the fourth quarter, down 2.4% from the year-ago quarter. High raw materials cost, supply chain disruptions and adverse currency movements drove the profit of this segment down. The segment also faced headwinds from cost incurred due to restructuring and lower sales volume, which were partly offset by higher selling prices and effective cost controls.
Performance Coatings Group: Net sales from this segment were $1,607.4 million in the fourth quarter, up 4.2% from the year-ago quarter. The upside was mainly supported by higher selling prices in all end markets but was partly offset by lower sales volume in APAC and EMEAI regions. Higher raw materials cost and increased costs resulting from supporting sales partly mitigated the rise in segment profits.
FY22 Results
Earnings for full-year 2022 were $7.72 per share compared with $6.98 a year ago. Net sales increased 11.1% year over year to $22,148.9 million.
Financials
At the end of the fourth quarter, Sherwin-Williams had cash and cash equivalents of $198.8 million, up around 20% year over year. Long-term debt increased approximately 11.6% to $9,591 million.
Sherwin-Williams generated $1.92 billion in net operating cash during 2022. The company also repurchased 3.4 million shares of its common stock during the year.
Outlook
Moving ahead, SHW sees a challenging demand environment in 2023. The company expects its architectural and some industrial businesses to remain under pressure due to the slowdown of U.S. housing market. Rising inflation is also expected to dent the company’s performance. Further, the company expects slowing economic conditions in Europe and uncertainties in China due to the pandemic along with the slowdown in the United States, as witnessed in some sectors, to affect its industrial business.
The company expects consolidated net sales growth to be flat to up a mid-single-digit percentage year over year in first-quarter 2023. For full-year 2023, it envisions consolidated net sales to be down a mid-single-digit percentage to flat compared to the year-ago level.
Sherwin-Williams also sees earnings in the range of $6.79-$7.59 per share for full-year 2023. Adjusted earnings have been forecast in the range of $7.95-$8.65 per share for 2023.
Price Performance
SHW’s shares are down 12.7% over a year compared with an 11% fall recorded by its industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Sherwin-Williams currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks to consider in the basic materials space include Nucor Corporation (NUE - Free Report) , Agnico Eagle Mines Limited (AEM - Free Report) and FMC Corporation (FMC - Free Report) . NUE and AEM both sport a Zacks Rank #1 (Strong Buy), while FMC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nucor’s shares have gained 61.9% in the past year. The company has a projected earnings growth rate of 21.5% for the current year. NUE topped Zacks Consensus Estimate in all of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 3.9% on average.
Agnico’s shares have gained 24% in the past year. The Zacks Consensus Estimate for AEM’S current-year earnings has been revised 0.4% upward in the past 60 days.
Agnico Eagle beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.4% on average.
FMC’s shares have gained 19.2% in the past year. The company has a projected earnings growth rate of 6.5% for the current year. FMC Corp. outpaced Zacks Consensus Estimate in all of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.9% on average.