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The company beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing it once, the average surprise being 2%. It pulled off an earnings surprise of 10.9% in the last reported quarter.
Sherwin-Williams' shares have risen 3.8% in the past year compared with the industry’s rise of 4.4%.
Image Source: Zacks Investment Research
What Do the Estimates Say?
The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $6,016 million, suggesting a rise of 2.5% from the year-ago reported number.
Our estimate for net sales of SHW’s Consumer Brands Group for the second quarter is $874 million, implying a decline of 2.9% year over year. We expect sales of its Performance Coatings Group to be $1,738 million, which indicates a 2.9% decline. Our estimate for SHW’s Paint Stores Group is $3,340 million, which suggests an increase of 5% from the year-ago reported number.
Factors to Note
Sherwin-Williams is expected to have benefited from its pricing actions to offset cost inflation in raw materials in the second quarter. Additionally, cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are expected to have provided margin benefits. The company is focusing on cost reductions through restructuring, which is projected to save around $50-$70 million annually, with 75% of these savings expected to be realized by the end of 2023.
However, softer demand is expected to have unfavorably impacted the company’s second-quarter performance. Sherwin-Williams is facing challenges in the demand environment, with weak demand in new residential and Consumer Brands Group DIY sectors. Sluggish macroeconomic conditions in Europe and China's slow recovery are also impacting demand. The industrial side of the business is under pressure in North America, and the slowdown in the U.S. housing market is affecting the industrial wood business. Despite these challenges, the company's pricing, cost reductions and margin improvement initiatives are expected to have supported its performance in the quarter to be reported.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Sherwin-Williams this season. 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.
Earnings ESP: Sherwin-Williams has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at $2.71. 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 #2.
The Sherwin-Williams Company Price and EPS Surprise
Here are some companies in the construction space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
The consensus estimate for BCC’s second-quarter earnings per share is currently pegged at $2.54.
PulteGroup, Inc. (PHM - Free Report) , which is slated to release its earnings on Jul 25, has an Earnings ESP of +0.29% and a Zacks Rank #2.
The consensus estimate for PHM’s second-quarter earnings per share is currently pegged at $2.47.
Meritage Homes Corporation (MTH - Free Report) , which is scheduled to release earnings on Jul 27, has an Earnings ESP of +0.98% and carries a Zacks Rank #2.
The Zacks Consensus Estimate for MTH’s second-quarter earnings per share is pegged at $3.49.
Image: Bigstock
What's in the Cards for Sherwin-Williams (SHW) in Q2 Earnings?
The Sherwin-Williams Company (SHW - Free Report) is scheduled to release second-quarter 2023 results before the opening bell on Jul 25.
The company beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing it once, the average surprise being 2%. It pulled off an earnings surprise of 10.9% in the last reported quarter.
Sherwin-Williams' shares have risen 3.8% in the past year compared with the industry’s rise of 4.4%.
Image Source: Zacks Investment Research
What Do the Estimates Say?
The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $6,016 million, suggesting a rise of 2.5% from the year-ago reported number.
Our estimate for net sales of SHW’s Consumer Brands Group for the second quarter is $874 million, implying a decline of 2.9% year over year. We expect sales of its Performance Coatings Group to be $1,738 million, which indicates a 2.9% decline. Our estimate for SHW’s Paint Stores Group is $3,340 million, which suggests an increase of 5% from the year-ago reported number.
Factors to Note
Sherwin-Williams is expected to have benefited from its pricing actions to offset cost inflation in raw materials in the second quarter. Additionally, cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are expected to have provided margin benefits. The company is focusing on cost reductions through restructuring, which is projected to save around $50-$70 million annually, with 75% of these savings expected to be realized by the end of 2023.
However, softer demand is expected to have unfavorably impacted the company’s second-quarter performance. Sherwin-Williams is facing challenges in the demand environment, with weak demand in new residential and Consumer Brands Group DIY sectors. Sluggish macroeconomic conditions in Europe and China's slow recovery are also impacting demand. The industrial side of the business is under pressure in North America, and the slowdown in the U.S. housing market is affecting the industrial wood business. Despite these challenges, the company's pricing, cost reductions and margin improvement initiatives are expected to have supported its performance in the quarter to be reported.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Sherwin-Williams this season. 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.
Earnings ESP: Sherwin-Williams has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at $2.71. 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 #2.
The Sherwin-Williams Company Price and EPS Surprise
The Sherwin-Williams Company price-eps-surprise | The Sherwin-Williams Company Quote
Stocks That Warrant a Look
Here are some companies in the construction space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
Boise Cascade Company (BCC - Free Report) , which is scheduled to release earnings on Jul 31, has an Earnings ESP of +2.36% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for BCC’s second-quarter earnings per share is currently pegged at $2.54.
PulteGroup, Inc. (PHM - Free Report) , which is slated to release its earnings on Jul 25, has an Earnings ESP of +0.29% and a Zacks Rank #2.
The consensus estimate for PHM’s second-quarter earnings per share is currently pegged at $2.47.
Meritage Homes Corporation (MTH - Free Report) , which is scheduled to release earnings on Jul 27, has an Earnings ESP of +0.98% and carries a Zacks Rank #2.
The Zacks Consensus Estimate for MTH’s second-quarter earnings per share is pegged at $3.49.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.