Sherwin Williams Earnings: Revenue Growth Drives Margin, Profit Increases

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S&P 500 (NYSE:SPY) component Sherwin Williams Co. (NYSE:SHW) reported its results for the third quarter. Sherwin-Williams is a manufacturer and distributor of paint, coatings and related products. While its professional, industrial, commercial and retail customers are mainly in North and South America, the company also has operations in Europe, Asia and the Caribbean.

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Sherwin Williams Co. Earnings Cheat Sheet

Results: Net income for Sherwin Williams Co. rose to $235 million ($2.24 per share) vs. $179.9 million ($1.71 per share) in the same quarter a year earlier. This marks a rise of 30.6% from the year-earlier quarter.

Revenue: Rose 4.8% to $2.6 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Sherwin Williams Co. beat the mean analyst estimate of $2.19 per share. It fell short of the average revenue estimate of $2.66 billion.

Quoting Management: Commenting on the financial results, Christopher M. Connor, Chairman and Chief Executive Officer, said, “We are pleased to report record sales and earnings per share on the continued positive sales volume and strong operating results of our Paint Stores Group. Selling price increases implemented across all segments in the previous twelve months are gaining traction against the higher raw material costs. The Paint Stores Group volume growth was strong across all end market segments. Our Consumer Group improved their operating results through operating efficiencies and selling price increases. Our Global Finishes and Latin America Coatings Groups are managing to improve their operating profit results despite the unfavorable effects of currency and the softening demand in their end markets.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 27.2% and in the first quarter, the figure rose 46.7%.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 5 cents in the second quarter, by one cent in the first quarter, and by 3 cents in the fourth quarter of the last fiscal year.

Revenue has increased for four consecutive quarters. Revenue increased 9.3% to $2.57 billion in the second quarter. The figure rose 15.1% in the first quarter from the year earlier and climbed 9.2% in the fourth quarter of the last fiscal year from the year-ago quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from $1.07 a share to $1.08 over the last sixty days. Over the past three months, the average estimate for the fiscal year has climbed from $6.37 per to share to $6.39.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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