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Sherwin-Williams (SHW) Down 3.2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Sherwin-Williams (SHW - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sherwin-Williams due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Sherwin-Williams Beats on Q2 Earnings & Sales, Ups View
Sherwin-Williams logged second-quarter 2023 earnings (as reported) of $3.07 per share, up around 38.9% from $2.21 in the year-ago quarter.
Barring one-time items, adjusted earnings in the reported quarter were $3.29 per share, which surpassed the Zacks Consensus Estimate of $2.71.
Sherwin-Williams posted revenues of $6,240.6 million, up around 6.3% year over year. The figure surpassed the Zacks Consensus Estimate of $6,016.5 million. The uptick was primarily attributable to higher selling prices, which influenced sales by a mid-single-digit percentage, as well as volume growth in the mid-single digits due to higher architectural sales volume in the Paint Stores Group. This was offset by lower volume in the industrial businesses. Acquisitions contributed 1.4% to the consolidated net sales increase.
Segmental Review
The Paint Stores Group segment registered net sales of $3,498.7 million in the second quarter, up around 10% year over year. The figure surpassed our estimate of $3,340 million. The upside was mainly owing to higher selling prices and volume growth in most end markets.
Net sales in the Consumer Brands Group segment rose 5.1% year over year to $945.8 million, beating our estimate of $874 million. Higher selling prices and volume growth across Latin America and Europe were partly offset by reduced sales volume in North America and Asia.
Net sales in the Performance Coatings Group rose roughly 0.3% year over year to around $1,794.9 million in the reported quarter, beating our estimate of $1,738 million. The upside was mainly driven by selling price increases in all markets and acquisitions, offset by lower volumes in most regions.
Financials
At the end of the second quarter, Sherwin-Williams had cash and cash equivalents of $209.4 million, down 33% year over year. Long-term debt increased around 5.8% year over year to $9,095.7 million.
During the first six months of 2023, the company generated $1.29 billion in net operating cash, a 102% increase over the same period in 2022. During the first six months of 2023, the company returned $848.7 million in cash to its shareholders in the form of dividends and repurchases of 2.3 million shares.
Outlook
The company has raised its sales and earnings guidance for 2023. The company expects consolidated net sales to be up or down low-single-digit percentage year over year for the third quarter. For 2023, it is projected to be up a low-single-digit percentage.
The company expects earnings per share for 2023 to be in the range of $8.46-$8.86, up from its prior view of $6.79-$7.59. Adjusted earnings are projected to be $9.30-$9.70 per share, up from the prior guidance of $7.95-$8.65
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 9.14% due to these changes.
VGM Scores
Currently, Sherwin-Williams has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Sherwin-Williams has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Sherwin-Williams (SHW) Down 3.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Sherwin-Williams (SHW - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sherwin-Williams due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Sherwin-Williams Beats on Q2 Earnings & Sales, Ups View
Sherwin-Williams logged second-quarter 2023 earnings (as reported) of $3.07 per share, up around 38.9% from $2.21 in the year-ago quarter.
Barring one-time items, adjusted earnings in the reported quarter were $3.29 per share, which surpassed the Zacks Consensus Estimate of $2.71.
Sherwin-Williams posted revenues of $6,240.6 million, up around 6.3% year over year. The figure surpassed the Zacks Consensus Estimate of $6,016.5 million. The uptick was primarily attributable to higher selling prices, which influenced sales by a mid-single-digit percentage, as well as volume growth in the mid-single digits due to higher architectural sales volume in the Paint Stores Group. This was offset by lower volume in the industrial businesses. Acquisitions contributed 1.4% to the consolidated net sales increase.
Segmental Review
The Paint Stores Group segment registered net sales of $3,498.7 million in the second quarter, up around 10% year over year. The figure surpassed our estimate of $3,340 million. The upside was mainly owing to higher selling prices and volume growth in most end markets.
Net sales in the Consumer Brands Group segment rose 5.1% year over year to $945.8 million, beating our estimate of $874 million. Higher selling prices and volume growth across Latin America and Europe were partly offset by reduced sales volume in North America and Asia.
Net sales in the Performance Coatings Group rose roughly 0.3% year over year to around $1,794.9 million in the reported quarter, beating our estimate of $1,738 million. The upside was mainly driven by selling price increases in all markets and acquisitions, offset by lower volumes in most regions.
Financials
At the end of the second quarter, Sherwin-Williams had cash and cash equivalents of $209.4 million, down 33% year over year. Long-term debt increased around 5.8% year over year to $9,095.7 million.
During the first six months of 2023, the company generated $1.29 billion in net operating cash, a 102% increase over the same period in 2022. During the first six months of 2023, the company returned $848.7 million in cash to its shareholders in the form of dividends and repurchases of 2.3 million shares.
Outlook
The company has raised its sales and earnings guidance for 2023. The company expects consolidated net sales to be up or down low-single-digit percentage year over year for the third quarter. For 2023, it is projected to be up a low-single-digit percentage.
The company expects earnings per share for 2023 to be in the range of $8.46-$8.86, up from its prior view of $6.79-$7.59. Adjusted earnings are projected to be $9.30-$9.70 per share, up from the prior guidance of $7.95-$8.65
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 9.14% due to these changes.
VGM Scores
Currently, Sherwin-Williams has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Sherwin-Williams has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.