Sherwin-Williams (SHW) Q1 Earnings: What's In The Cards?
Zacks Investment Research | Apr 19, 2017 04:25AM ET
Sherwin-Williams Company (NYSE:SHW) is set to release first-quarter 2017 results ahead of the bell on Apr 20.
In the last quarter, the paints and coatings company delivered a positive earnings surprise of 5.41% by posting adjusted earnings of $2.34 per share. The adjusted earnings beat the Zacks Consensus Estimate of $2.22.
Sherwin-Williams recorded net sales of $2,782.6 million in the quarter, marking a 6.8% year-over-year rise. Revenues beat the Zacks Consensus Estimate of $2,688 million.
Increased sales volume in the Sherwin-Williams’ Paint Stores Group and changes in revenue classification led to higher sales, partly offsetting the impact of unfavorable currency translation. Sherwin-Williams beat the Zacks Consensus Estimate in two of the trailing four quarters with an average beat of around 2.82%.
Can Sherwin-Williams surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.
Sherwin-Williams Company (The) Price and EPS Surprise
Paints & Allied Products industry’s 6.9% gain.
However, the company still remains exposed to volatility in raw material costs, primarily for titanium dioxide (TiO2), a key paint pigment. It expects higher year-over-year raw materials costs in 2017 with most of the inflation is expected to come from TiO2. The input costs for the paint and coatings industry are expected to be up in the low-single digits range in 2017.
The termination date of the proposed merger between Sherwin-Williams and Valspar, which is currently awaiting regulatory approvals, has been recently extended to Jun 21 from Mar 21. The extension provides sufficient time to complete the merger by addressing necessary regulatory concerns.
On Apr 12, Sherwin-Williams and Valspar entered into definitive agreement with Axalta Coating Systems to divest Valspar's North American Industrial Wood Coatings business assets to Axalta for $420 million in cash.
The companies are divesting the business to Axalta in regard to reviews by the Canadian Competition Bureau (CCB) and Federal Trade Commission (FTC) for the planned merger. Sherwin-Williams said that it can now move ahead to obtain the necessary approvals for acquiring Valspar as the divestiture addresses regulatory concerns appropriately. We expect an update on the merger in its first-quarter earnings call.
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Earnings Whispers
Our proven model does not conclusively show that Sherwin-Williams is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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