Sherwin-Williams Beats and Raises Guidance

This morning, Sherwin-Williams (SHW) posted Q3 adjusted earnings of $6.65 per share. That beat Wall Street’s estimates of $6.48 per share. The shares are up about 5% today.

This was a very good quarter for Sherwin. The CEO said:

“Sherwin-Williams delivered strong results in the quarter as adjusted earnings per share increased 17.1% year-over-year to $6.65. Our performance in the quarter was driven by continued strength in North American architectural paint markets, which offset choppiness in some industrial end markets. U.S. and Canada same store sales growth was 8.1% as our pro painting customers continued to report strong demand. As a result of this strong volume and operating efficiencies, consolidated gross margin expanded over 300 basis points to 45.7%. Adjusted EBITDA margin in the quarter improved 150 basis points to 18.9% compared to the prior year.

“For the second consecutive quarter, all three operating segments increased segment profit and margin compared to the same period last year. In The Americas Group, our North American paint stores generated strong growth in all regions and all customer end markets, led by double digit growth in residential repaint. With the strong volume, the team delivered incremental operating margin of approximately 37%, and we have opened 31 net new stores year to date.

Segment profit in The Americas Group increased $85.9 million to $663.7 million in the quarter and increased $122.1 million to $1.61 billion in nine months due primarily to higher paint sales volume and selling price increases.

Sherwin is increasing its full-year guidance range to $20.90 – $21.30 per share. The previous range was $20.40 to $21.40 per share. Since Sherwin has already made $16.83 per share for the first nine months of this year, the new range implies Q4 earnings of $4.07 to $4.47 per share.

SHW is up 118% for us since we first added it to the Buy List in 2017.

Posted by on October 22nd, 2019 at 12:42 pm


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