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Sherwin-Williams (SHW) Q3 Earnings and Sales Miss Estimates
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The Sherwin-Williams Company (SHW - Free Report) makes and distributes paints, coatings and related products, primarily in the North and South America. The company also has operations in the Caribbean region, Europe and Asia. Its well-known brands include Dutch Boy, Minwax and Krylon.
Sherwin-Williams’ strategy is to grow through acquisitions and internal initiatives such as efficient working capital management and innovation. Sherwin-Williams has agreed to buy rival paints maker Valspar for roughly $11.3 billion. The acquisition will allow Sherwin-Williams to strengthen its position as a leading paints and coatings provider globally, leveraging highly complementary offerings, strong brands and technologies. Sherwin-Williams also continues to invest in its Paint Stores Group segment to boost market share. Additionally, the company’s aggressive cost control initiatives, working capital reductions, supply chain optimization and productivity improvement should continue to yield margin benefits.
Let’s have a quick look at this paint company’s third-quarter 2016 release.
Estimate Trend & Surprise History
Investors should note that the earnings estimate for Sherwin-Williams for the third quarter has seen an uptrend over the past month. The company has beaten the Zacks Consensus Estimate in 3 of the trailing 4 quarters with an average beat of around 5.51%.
Sherwin-Williams’ adjusted earnings for the quarter came in at $4.23 per share. Earnings missed the Zacks Consensus Estimate of $4.34.
Revenues
Sherwin-Williams reported revenues of $3,279.5 million, up around 4% year over year. That also missed the Zacks Consensus Estimate of $3,295 million.
Key Developments to Note
Sherwin-Williams projects low single digit percentage increase in net sales year over year for fourth-quarter 2016. The company expects earnings per share in the fourth quarter to be in the range of $1.45 to $1.55 per share, compared to $2.12 earned in the fourth quarter of 2015. Fourth-quarter earnings per share includes costs related to the planned acquisition of Valspar of around 71 cents per share and an increase in earnings per share of about 3 cents related to the decrease in the income tax provision.
For 2016, the company expects consolidated net sales to increase by a low single digit clip compared with 2015. The company revised its earnings per share guidance for 2016 to the range of $11.30 to $11.40 per share, compared to $11.16 per share earned in 2015. Full-year earnings per share includes costs related to the planned acquisition of Valspar of around $1.35 cents per share and an increase in earnings per share of about 40 cents related to the decrease in the income tax provision.
Zacks Rank
Currently, Sherwin-Williams has a Zacks Rank #1 (Strong Buy), but that could change following the company’s earnings report which was just released.
Market Reaction
Sherwin-Williams’ shares were inactive the pre-market trading following the release. It would be interesting to see how the market reacts to the results during the trading session today.
Check back later for our full write up on Sherwin-Williams’ earnings report!
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Sherwin-Williams (SHW) Q3 Earnings and Sales Miss Estimates
The Sherwin-Williams Company (SHW - Free Report) makes and distributes paints, coatings and related products, primarily in the North and South America. The company also has operations in the Caribbean region, Europe and Asia. Its well-known brands include Dutch Boy, Minwax and Krylon.
Sherwin-Williams’ strategy is to grow through acquisitions and internal initiatives such as efficient working capital management and innovation. Sherwin-Williams has agreed to buy rival paints maker Valspar for roughly $11.3 billion. The acquisition will allow Sherwin-Williams to strengthen its position as a leading paints and coatings provider globally, leveraging highly complementary offerings, strong brands and technologies. Sherwin-Williams also continues to invest in its Paint Stores Group segment to boost market share. Additionally, the company’s aggressive cost control initiatives, working capital reductions, supply chain optimization and productivity improvement should continue to yield margin benefits.
Let’s have a quick look at this paint company’s third-quarter 2016 release.
Estimate Trend & Surprise History
Investors should note that the earnings estimate for Sherwin-Williams for the third quarter has seen an uptrend over the past month. The company has beaten the Zacks Consensus Estimate in 3 of the trailing 4 quarters with an average beat of around 5.51%.
SHERWIN WILLIAM Price and EPS Surprise
SHERWIN WILLIAM Price and EPS Surprise | SHERWIN WILLIAM Quote
Earnings
Sherwin-Williams’ adjusted earnings for the quarter came in at $4.23 per share. Earnings missed the Zacks Consensus Estimate of $4.34.
Revenues
Sherwin-Williams reported revenues of $3,279.5 million, up around 4% year over year. That also missed the Zacks Consensus Estimate of $3,295 million.
Key Developments to Note
Sherwin-Williams projects low single digit percentage increase in net sales year over year for fourth-quarter 2016. The company expects earnings per share in the fourth quarter to be in the range of $1.45 to $1.55 per share, compared to $2.12 earned in the fourth quarter of 2015. Fourth-quarter earnings per share includes costs related to the planned acquisition of Valspar of around 71 cents per share and an increase in earnings per share of about 3 cents related to the decrease in the income tax provision.
For 2016, the company expects consolidated net sales to increase by a low single digit clip compared with 2015. The company revised its earnings per share guidance for 2016 to the range of $11.30 to $11.40 per share, compared to $11.16 per share earned in 2015. Full-year earnings per share includes costs related to the planned acquisition of Valspar of around $1.35 cents per share and an increase in earnings per share of about 40 cents related to the decrease in the income tax provision.
Zacks Rank
Currently, Sherwin-Williams has a Zacks Rank #1 (Strong Buy), but that could change following the company’s earnings report which was just released.
Market Reaction
Sherwin-Williams’ shares were inactive the pre-market trading following the release. It would be interesting to see how the market reacts to the results during the trading session today.
Check back later for our full write up on Sherwin-Williams’ earnings report!
Confidential from Zacks
Beyond this Tale of the Tape, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>