Sherwin-Williams stock falls as Q3 print disappoints; analysts still optimistic

Investing.com -- Sherwin-Williams (NYSE:SHW ) saw its shares slide 3% Tuesday after the company reported worse-than-expected Q3 results. The company’s annual guidance also missed analyst expectations.

For the fiscal Q3 2024, the pain and coating manufacturing company reported earnings per share (EPS) of $3.37, falling short of the $3.55 estimated by analysts.

Revenue stood at $6.16 billion, also below the consensus estimate of $6.2 billion.

The Consumer Brands Group posted net sales of $790.5 million, surpassing the expected $770 million.

Meanwhile, the Performance Coatings Group reported net sales of $1.72 billion, just under the $1.74 billion estimate.

Capital expenditures for the quarter were $235.3 million, notably higher than the estimated $109.6 million.

BMO Capital Markets analysts said the reaction to the print is no surprise, though they believe the outlook for the company remains positive.

"While clearly 3Q will disappoint investors and send the stock lower, the set-up for significantly higher results in 2025/26 remains intact with SHW to benefit from a housing recovery amplified by share gains and stronger pricing," they noted.

For full fiscal 2024, Sherwin-Williams projects EPS in the range of $11.10 to $11.40, missing the estimated $11.50.

"Sherwin-Williams grew sales, expanded gross margin, and increased EBITDA and adjusted diluted net income per share despite continued choppiness in the demand environment," said President and CEO Heidi G. Petz.

"We also chose to invest ahead of the curve in the quarter, given the unprecedented long-term opportunities that continue to emerge from an increasingly uncertain competitive landscape,” he added.

“We expect SG&A to moderate sequentially, resulting in a low to mid-single digit increase for the second half as anticipated."

Source: Investing.com