What's in Store for Sherwin-Williams' (SHW) Q3 Earnings?

The Sherwin-Williams Company SHW is set to release third-quarter 2020 results ahead of the bell on Oct 27. The company’s results are expected to reflect strength in architectural paint markets in North America and improved demand in its industrial business.

The company delivered an earnings surprise of 6.6%, on average, over the trailing four quarters. It posted an earnings surprise of 24.8% in the last-reported quarter.

Sherwin-Williams’ shares have gained 22.7% in the past year compared with the industry’s 23.4% growth.

 

Let’s see how things are shaping up for this announcement.

Zacks Model

Our proven model predicts an earnings beat for Sherwin-Williams this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for Sherwin-Williams is +1.04%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at $7.68. 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.

What do the Estimates Indicate?

The company, last month, said that it now expects consolidated net sales for the third quarter to rise 3-5% year over year. This compares to its earlier expectation of up or down a low-single-digit percentage for third-quarter consolidated net sales on a year-over-year basis.

Sherwin-Williams also expects third-quarter net sales in the Americas Group segment to be up a low-single-digit percentage compared with its earlier view of flat-to-up a low-single-digit percentage.

For the Consumer Brands Group unit, net sales in the third quarter are projected to rise by a low-twenties percentage compared with the prior guidance of up a low-double-digit percentage.

Moreover, net sales in the Performance Coatings Group unit for the third quarter is forecast to be flat-to-down a low-single-digit percentage compared with the earlier view of down a low-to-mid-single-digit percentage.

The Zacks Consensus Estimate for third-quarter total sales is currently pegged at $5,078 million, which suggests an increase of 4.3% from the year-ago quarter’s figure.

The consensus estimate for net sales in the Americas Group segment currently stands at $2,987 million, which indicates a rise of 3.1% year over year.

The Zacks Consensus Estimate for net sales in the Consumer Brands Group segment is currently pegged at $813 million, which suggests an increase of 19.9% from the year-ago quarter’s tally.

Moreover, the consensus estimate for net sales in the Performance Coatings Group segment currently stands at $1,264 million, which calls for a decline of 2% year over year.

Some Factors to Watch Out For

The company’s third-quarter results are likely to reflect strong demand for architectural coatings. It has been witnessing higher demand for architectural DIY (Do It Yourself) paint in North America.

Sherwin-Williams witnessed stronger-than-expected demand for architectural coatings in the third quarter, mainly driven by new residential, DIY and residential repaint units.

In the industrial business, the company saw improving demand led by persistent strength in packaging and other segments, especially in automotive refinish and industrial wood.

Higher architectural sales volumes are likely to support results in the Americas Group segment in the September quarter. The Consumer Brands Group unit is also expected to have benefited from strong demand from retail partners in the third quarter.

Moreover, the company’s cost-control initiatives, supply chain optimization and productivity improvement actions are also likely to have provided margin benefits in the quarter to be reported.

The SherwinWilliams Company Price and EPS Surprise

The SherwinWilliams Company Price and EPS Surprise

The SherwinWilliams Company price-eps-surprise | The SherwinWilliams Company Quote

Other Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Axalta Coating Systems Ltd. AXTA, scheduled to release earnings on Oct 22, has an Earnings ESP of +4.39% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle Mines Limited AEM, scheduled to release earnings on Oct 28, has an Earnings ESP of +14.25% and carries a Zacks Rank #1.

Newmont Corporation NEM, scheduled to release earnings on Oct 29, has an Earnings ESP of +2.24% and carries a Zacks Rank #1.

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