Sherwin-Williams Misses Q2 Earnings And Revenues

The Sherwin-Williams Company (SHW - Analyst Report) makes and distributes paints, coatings and related products, primarily in the North and South America. The company also has operations in the Caribbean region, Europe and Asia. Its well-known brands include Dutch Boy, Minwax and Krylon.

Sherwin-Williams’ strategy is to grow through acquisitions and internal initiatives such as efficient working capital management and innovation. The company continues to invest in its Paint Stores Group segment to boost market share. The acquisition of the U.S. and Canadian businesses of Consorcio Comex S.A. de C.V. has ushered in significant opportunity for Sherwin-Williams. The buyout has enabled it to better serve its customers across some of its key markets. It is also implementing effective pricing strategies to offset higher raw material costs.

Let’s have a quick look at this paint company’s second-quarter 2015 release.

Estimate Trend & Surprise History

Investors should note that the earnings estimate for Sherwin-Williams for the second quarter 2015 has been static over the past week. The company has beaten the Zacks Consensus Estimate in 3 of the trailing 4 quarters with an average beat of around 2.52%.

Earnings

Sherwin-Williams’ adjusted earnings came in at $3.77 per share. Earnings missed the Zacks Consensus Estimate of $3.82 per share.

Revenues

Sherwin-Williams reported revenues of $3,132 million, up 2.9% year over year. This however missed the Zacks Consensus Estimate of $3,258 million.

Key Developments to Note

Sherwin-Williams added 22 net new locations in its Paint Stores Group in the first half of 2015. The company expects consolidated net sales in the third quarter of 2015 to increase 3%−5% year over year. At this level, the company anticipates earnings in the band of $3.75-$3.90 per share for the quarter versus $3.35 earned in the third quarter of 2014.

For full-year 2015, Sherwin-Williams anticipate consolidated net sales in the third quarter of 2015 to increase 3%−5% year over year. At this level, the company revised its earnings forecast for full-year 2015 in the band of $10.60-$11.00 per share versus $8.78 per share earned in 2014.

Zacks Rank

Currently, Sherwin-Williams has a Zacks Rank #2 (Buy), but that could change following its earnings report which was just released.

Market Reaction

 It will be interesting to see how the market reacts to the results during the trading session today. [Update: Shares down almost 10% at 11am ET.]

Update: See more detailed analysis here.