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Sherwin-Williams (SHW) Q4 Earnings & Sales Beat Estimates

The Sherwin-Williams CompanySHW 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' consumer and paint stores businesses still remain impacted by the global economic weakness. Moreover, the company's Latin American operation remains exposed to currency headwinds and soft end-market demand. Sherwin-Williams also remains exposed to volatility in raw material costs. Nevertheless, Sherwin-Williams follow a strategy of growth through acquisitions and internal initiatives such as efficient working capital management and innovation. This enables the company to somewhat reduce its dependency upon prevailing market conditions.

Let's have a quick look at this paint company's fourth-quarter 2016 release.

Estimate Trend & Surprise History

Investors should note that the earnings estimate for Sherwin-Williams for the fourth quarter has been static over the past month. The company has beaten the Zacks Consensus Estimate in 2 of the trailing 4 quarters and missed in 2, with an average beat of around 4.36%.

Earnings

Sherwin-Williams' adjusted earnings for the quarter came in at $2.34 per share. Earnings surpassed the Zacks Consensus Estimate of $2.21.

Sherwin-Williams Company (The) Price and EPS Surprise

Sherwin-Williams Company (The) Price and EPS Surprise | Sherwin-Williams Company (The) Quote

Revenues

Sherwin-Williams reported revenues of $2,782.6 million, up around 6.8% year over year. That also surpassed the Zacks Consensus Estimate of $2,688 million.

Key Developments to Note

Sherwin-Williams projects mid to high single digit percentage increase in net sales year over year for first-quarter 2017. The company expects earnings per share in the first quarter to be in the range of $1.45 to $1.55 per share, compared to $1.75 earned in the first quarter of 2016. First-quarter earnings per share includes costs related to the planned acquisition of Valspar of around 69 cents per share and an increase in earnings per share of about 11 cents related to the decrease in the income tax provision.

For full-year 2017, Sherwin-Williams projects mid-single digit percentage increase in net sales from 2016. The company expects earnings per share in the year to be in the range of $13.00 to $13.20 per share, compared to $11.99 earned in 2016. The year's earnings per share includes costs related to the planned acquisition of Valspar of around 80 cents per share and an increase in earnings per share of about 20 cents related to the decrease in the income tax provision.

Sherwin-Williams expects divestiture will be required to gain approval for the completion of the Valspar acquisition. The company expects to divest business that generates less than $650 million in revenue. The acquisition is expected to conclude at $113 per share post negotiations for divestiture.

Zacks Rank

Currently, Sherwin-Williams has a Zacks Rank #4 (Sell), but that could change following the company's earnings report which was just released.

Market Reaction

Sherwin-Williams' shares rose 5.9% in the pre-market trading . It would be interesting to see how the market reacts to the results during the trading session today.

Check back later for our full write up on Sherwin-Williams' earnings report!

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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