The Sherwin-Williams Company SHW is set to release first-quarter 2022 results on Apr 26, before market open. The company’s performance is expected to reflect strong demand as well as pricing and cost-control initiatives. Raw material availability and logistics and transportation issues are likely to have been a headwind.
The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, while missing the same twice. The company has a trailing four-quarter earnings surprise of 6%, on average. SHW reported a negative earnings surprise of 0.7% in the last reported quarter.
Sherwin-Williams’ shares have declined 6.2% in the past year compared with a 6.9% fall of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Indicate?
The Zacks Consensus Estimate for first-quarter total sales for Sherwin-Williams is currently pegged at $4,878 million, suggesting a 4.8% rise from the year-ago quarter’s figure.
The consensus estimate for net sales in The Americas Group segment is currently pegged at $2,594 million, indicating an increase of 3.6% year over year.
The Zacks Consensus Estimate for net sales in the Consumer Brands Group segment is currently pegged at $692 million, suggesting a fall of 11.1% from the year-ago quarter’s tally.
The consensus estimate for net sales in the Performance Coatings Group segment is currently at $1,583 million, calling for a 15.2% rise year over year.
Factors to Look Out For
Sherwin-Williams is expected to have benefited from favorable demand in domestic markets in thefirst quarter. It is likely to have witnessed strong architectural sales across professional end markets, driven by continued strength in residential repaint, commercial and property maintenance and selling price increases.
The company is likely to have benefited from higher sales in the Performance Coatings Group, driven by healthy sales volumes and pricing actions.
Sherwin-Williams’ cost-control initiatives, working capital reductions, supply chain optimization and productivity improvement are expected to have provided margin benefits in the quarter to be reported.
SHW is expected to have faced headwinds from raw material availability and logistics constraints and cost inflation. Raw material availability associated with the pandemic is likely to have affected The Americas Group’s performance. Raw material pricing is likely to have been high in the first quarter. For this year, the company sees input cost inflation of low-double-digit to mid-teens percentage, with the most significant impact expected in the first quarter. Pandemic-related headwinds are likely to have impacted performance in the first quarter. SHW is also likely to have been affected by higher labor and transportation costs due to the pandemic.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Sherwin-Williams this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for Sherwin-Williams is -0.70%. The Zacks Consensus Estimate for first-quarter earnings is currently pegged at $1.54. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Sherwin-Williams currently carries a Zacks Rank #4 (Sell).
The SherwinWilliams Company Price and EPS Surprise
The SherwinWilliams Company price-eps-surprise | The SherwinWilliams Company Quote
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
Ashland Global Holdings Inc. ASH, scheduled to release earnings on Apr 26, has an Earnings ESP of +13.64% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ashland's first-quarter earnings has been revised 10.9% upward in the past 60 days. The consensus estimate for ASH’s earnings for the quarter is currently pegged at $1.32.
Huntsman Corporation HUN, expected to release earnings on Apr 28, has an Earnings ESP of +0.56% and carries a Zacks Rank #3.
The consensus estimate for Huntsman’s first-quarter earnings has been revised 17.6% upward in the past 60 days. The Zacks Consensus Estimate for HUN’s earnings for the quarter is pegged at $1.
The Mosaic Company MOS, scheduled to release earnings on May 2, has an Earnings ESP of +0.89% and sports a Zacks Rank #1.
The Zacks Consensus Estimate for Mosaic’s first-quarter earnings has been revised 14.6% upward in the past 60 days. The Zacks Consensus Estimate for MOS’s earnings for the quarter is currently pegged at $2.44.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The SherwinWilliams Company (SHW): Free Stock Analysis Report
Ashland Global Holdings Inc. (ASH): Free Stock Analysis Report
The Mosaic Company (MOS): Free Stock Analysis Report
Huntsman Corporation (HUN): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
