Sherwin Williams Company
) is scheduled to report its second-quarter 2012 results before the
market opens on Thursday, July 19. The Zacks Consensus Estimate for
the quarter is $2.11 per share, representing an estimated
year-over-year increase of 27.1%.
With respect to earnings surprises, Sherwin Williams has
outperformed the Zacks Consensus Estimate in three of the trailing
four quarters. Despite this, it has delivered an average negative
earnings surprise of 0.25% over the past four quarters due to a
negative earnings surprise of 6.2% in the second quarter of 2011.
The average negative earnings surprise of 0.25% implies that the
company has failed to meet the Zacks Consensus Estimate by that
measure over the last four quarters.
Sherwin-Williams reported net earnings of 95 cents per share in
the first quarter of the year versus 63 cents per share in the
year-ago quarter. It surpassed the Zacks Consensus Estimate by a
Net sales for the quarter increased 15.1% year over year to
$2.14 billion, exceeding the Zacks Consensus Estimate of $2.10
billion. The growth was driven by an increase in paint sales volume
and selling price.
For the second quarter of 2012, Sherwin-Williams expects
consolidated sales to increase in the range of 10% to 15% year over
year. The company expects earnings per share in the band of
$1.92-$2.07 for the quarter.
For full year 2012, the company anticipates consolidated net
sales to increase above the 2011 levels by a high
single-to-low-teens percentage. It has revised the earnings per
share guidance upwards to $5.75-$6.05 from its previous range of
Estimate Revisions Trend
In the past 30 days, out of 12 analysts covering the stock, 1
analyst has lowered its estimates for the second quarter while one
has moved in the opposite direction. Over the last seven days, none
of the analysts made any upward or downward revision of their
Estimates for 2012 portray almost a similar trend. Of the 12
analysts covering the stock, 1 analyst lowered its estimates for
the year over the last 30 days while one moved in the upward
Recently, the Zacks Consensus Estimate for the second quarter has
been increased to $2.11 per share from $2.09 in the last 30 days.
Over the 90-day period, the Zacks Consensus Estimate increased from
$2.03 to $2.11 per share for the second quarter. The Zacks
Consensus Estimate for 2012 is $6.16, representing an estimated
year-over-year increase of 25.2%.
Despite weak housing markets, the company continues to invest in
its core Paint Stores Group in order to boost market share. The
Paint segment has also revived with a favorable mix towards
professional contractors and away from the do-it-yourself channel.
The company is focused on capturing a larger share of its
end-markets by increasing the number of stores. We expect Sherwin
Williams will continue to expand its footprint through meaningful
acquisitions and consolidate the North American paint industry.
However, raw material prices remain a cause of concern for the
company. The company experiences weak pricing power in the Consumer
and Paint segments. Furthermore, it faces stiff competition from
PPG Industries Inc.
In light of the favorable conditions, the company retains a
Zacks #2 Rank, indicating a short-term (1 to 3 months) Buy rating.
However, we have maintained a long-term (more than 6 months)
Neutral recommendation on the stock due to headwinds.
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SHERWIN WILLIAM (SHW): Free Stock Analysis
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