Sherwin Williams stock drops on Q4 earnings, issues weaker-than-expected guidance

Yahoo Finance Live anchors discuss the decline in stock for Sherwin Williams following fourth-quarter earnings.

Video Transcript

JULIE HYMAN: Let's get to some more opening-bell movers for you right now. Sherwin Williams Company, the paint company, reported mixed results, missing on the top line. The paint manufacturer also issued weaker-than-expected guidance for the full year, and not just weaker-than-expected guidance but like really weaker-than-expected guidance. I mean, the upper end of its forecast for the full year for earnings is $8.65. The estimate was for $10.18.

And this is a company that also struggled throughout 2022 as we saw falling demand for paint related to the housing market. So it's interesting here that this is still going on. This is even after the company says that raw-material costs are falling, that they expect those costs to decrease by a low to mid single-digit percentage.

BRIAN SOZZI: This stock really getting painted with red today, Julie. Really, I had to.

JULIE HYMAN: I think getting shellacked is what you're looking for.

BRIAN SOZZI: Getting shellacked, OK. Well, look, here's another company, I think-- and we've seen this with a lot of consumer-products earnings recently, a story I have, consumers pushing back on price increases. And if you go division by division at Sherwin Williams, they have pushed through seriously, seriously higher price increases on consumers, and it looks like it's starting to impact the sales run rate or the volumes of this business.

And the margins were up in the most recent quarter. That's a good thing. But if consumers are pushing back on those higher prices, maybe this is a completely different margin story and negatively-- a negative margin story at some point this year.

BRAD SMITH: Yeah, I'll be brief with this because they actually pointed out many of the catalysts that are impacting their business as of right now, saying that the US housing environment and the equation will be under significant pressure this year. They also said that slowing existing home sales, continued high inflation also going to be some of the headwinds there.

And then on the industrial side, already seeing slowdowns in Europe. Same beginning to appear in the US across several sectors there. Plus in China, they also noted that COVID remains a factor. Trajectory of the economic recovery there difficult to map. And so you align all of those things, and it still creates or paints a very murky picture.