Barron’s on Sherwin-Williams

Barron’s highlights the strong earnings for Sherwin-Williams (SHW):

Covid-19 wasn’t all good news for the company: Net sales in its Americas group fell 8.4% in the quarter and fell 1.7% for the first half of the year as a whole, as DIY demand wasn’t able to make up for declines in other end markets. Its performance coatings group saw sales slip 16.5% and 9% for the quarter and first half, respectively. However, sales in its consumer brands group climbed 21.8% in the quarter and 9.8% in the first six months of 2020.

For the full year, Sherwin-Williams expects to earn between $21.75 and $23.25 a share, up from its previous range of $19 to $21 a share, and above the $20.33 consensus estimate. (Its forecast excludes $2.54 a share in amortization expenses related to acquisitions.)

Expectations were already high going into the report, given how much consumers are spending on their homes. Sherwin-Williams is up 1.4% to $642.55 in morning trading, bolstered by the strong results. The shares have gained 10% since the start of the year, while the S&P 500 is up less than 1% over the same period.

However the company’s bottom-line results were much better than expected: Not only are people redoing their own homes, but new-home construction has led to an increase in demand from professionals as well. Many companies aren’t providing full-year guidance. Sherwin-Williams’ ability to raise its forecast—and say it plans to resume buying back shares in the second half of the year—was a welcome development.

Posted by on July 29th, 2020 at 1:48 pm


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