Cleveland, Ohio’s Sherwin-Williams Company (SHW) is a leading provider of paints, coatings, and other related products tailored for industrial, commercial, and retail sectors. With a market capitalization of $83.5 billion, Sherwin-Williams operates through three primary segments: Paint Stores Group (PSG), Consumer Brands Group (CBG), and Performance Coatings Group (PCG).
As the company gears up to announce its first-quarter financial results on Tuesday, April 29, analysts are optimistic. They anticipate an adjusted earnings per share (EPS) of $2.23, reflecting a 2.8% increase from the $2.17 reported in the same quarter last year. Over the previous four quarters, Sherwin-Williams has experienced mixed results, having fallen short of analysts’ bottom-line expectations twice, while surpassing them on two occasions as well.
For fiscal year 2025, projections indicate that Sherwin-Williams’ adjusted EPS will rise from $11.33 in fiscal 2024 to $12. This marks a noteworthy growth of 5.9%. Furthermore, analysts predict a significant earnings increase of 11.4% year-over-year, bringing EPS to $13.37 in fiscal 2026.
Over the past year, Sherwin-Williams’ stock has witnessed a slight uptick of 67 basis points, which is a significant contrast to the Materials Select Sector SPDR Fund (XLB), which has seen a decline of 15.3%. The S&P 500 Index ($SPX) also experienced a 1.4% drop during the same period.
The stock price of Sherwin-Williams rose by 1.4% following the Q4 results announcement on January 30. Despite facing a revenue decline in the CBG and PCG segments, the PSG segment managed to achieve a 3.4% year-over-year growth in net sales, exceeding $3 billion. Although the company’s total revenue increased slightly by 86 basis points to $5.3 billion, it fell short of Wall Street’s expectations. On a positive note, the company reported significant margin expansion across various segments, resulting in a 15.5% rise in adjusted EPS to $2.09, which was approximately 1% higher than consensus forecasts.
Throughout 2024, Sherwin-Williams faced challenges due to weak industry demand, leading to subpar topline performance. Looking ahead to fiscal year 2025, the company is predicting an above-market sales growth, even though industry demand is expected to remain weak throughout the year, with little indication of recovery by 2026. Consequently, the company forecasts modest growth in FY 2025 net sales, expected to increase by only a low single-digit percentage. However, on a more optimistic note, Sherwin-Williams is implementing cost-cutting measures and focusing on enhancing operational efficiency, with hopes of achieving slight margin growth.
Analysts express a moderate level of optimism regarding Sherwin-Williams’ stock, which holds a “Moderate Buy” rating. Among the 25 analysts reviewing the stock, 14 recommend a “Strong Buy,” two suggest a “Moderate Buy,” eight advise a “Hold,” and one recommends a “Moderate Sell” rating. The average price target stands at $393.50, indicating a potential upside of 18.5% from current values.
The information contained within this article is strictly for informative purposes and does not constitute financial advice. Investors should conduct their due diligence before making investment decisions. For further details, readers can refer to additional resources available on Barchart.
