News

The Sherwin-Williams Company SHW is scheduled to release second-quarter 2024 results before the opening bell on Jul 23.

The company beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once, the average surprise being 8.5%.

Sherwin-Williams' shares have gained 20.1% in the past year in line with the industry’s rise.

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What Do the Estimates Say?

The Zacks Consensus Estimate for sales for SHW for the to-be-reported quarter is currently pegged at $6,350.1 million, suggesting a rise of around 1.8% from the year-ago reported number.

The Zacks Consensus Estimate for net sales for SHW’s Consumer Brands Group for the second quarter is $923.4 million, implying a decline of 2.4% year over year.

The Zacks Consensus Estimate for Performance Coatings Group is $1,793.6 million, which indicates a 0.07% fall. The consensus estimate for Paint Stores Group is $3,635.9 million, which suggests a rise of 4% from the year-ago reported number.

Factors to Note

Sherwin-Williams is likely to have benefited from its actions to expand its retail business in response to strong domestic demand. The company remains focused on gaining a larger share of its end markets, as evidenced by the increasing number of retail stores.

Sherwin-Williams' cost-cutting initiatives, supply chain efficiency and increased productivity are likely to have supported profits in the second quarter. Efforts to raise selling prices across all segments and acquisition gains are expected to have aided the company's earnings in the second quarter. Furthermore, its solid cash generation is likely to have resulted in significant returns to stockholders.

The company is taking restructuring measures focused on the Consumer Brands Group, Performance Coatings Group and corporate operations. SHW's cost-cutting actions are expected to have resulted in margin improvements in the second quarter. It is also projected to have benefited from moderating raw material costs.

However, demand weakness is likely to have persisted in new residential construction and the Consumer Brands Group's DIY division in North America. Sherwin-Williams is also likely to have encountered headwinds in certain of its Performance Coatings Group businesses. Sales in Packaging and General Industrial are expected to have remained under pressure due to weak demand.

Zacks Model

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 here.

Earnings ESP: Earnings ESP for SHW is -4.42%. This is because the Most Accurate Estimate stands at $3.35 while the Zacks Consensus Estimate is pegged at $3.51. 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 Zacks Rank #4 (Sell).

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 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:

Royal Gold Inc. RGLD, slated to release its earnings on Aug 7, has an Earnings ESP of +2.99% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for RGLD’s second-quarter earnings per share is currently pegged at $1.17.

Agnico Eagle Mines Limited AEM, slated to release earnings on Jul 31, has an Earnings ESP of +4.39% and carries a Zacks Rank #2 at present.

The consensus mark for AEM’s second-quarter earnings is currently pegged at 86 cents.

Avient Corporation AVNT, slated to release earnings on Aug 6, has an Earnings ESP of +0.20% and carries a Zacks Rank #3 at present.

The consensus mark for AVNT’s second-quarter earnings is currently pegged at 72 cents.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.