The Sherwin-Williams Company SHW is scheduled to release fourth-quarter 2022 results before the opening bell on Jan 26.

The company beat Zacks Consensus Estimate for earnings in two of the last four quarters while missing it twice, the average surprise being a negative 0.4%. It posted an earnings surprise of 8.9% in the last reported quarter.

Higher segment net sales resulting from strong demand and good cost control initiatives taken by the company are expected to have supported SHW’s fourth-quarter performance. However, elevated input and labor costs and weak demand in Europe and China are likely to have posed a headwind for the company.  

Sherwin-William’s shares have lost 16.4% in the past year compared with the industry’s decline of 14.8%.

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What Do the Estimates Say?

The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $5,251 million, suggesting a rise of 10.3% from the year-ago reported number.

The Zacks Consensus Estimate for net sales of SHW’s Consumer Brands Group for the fourth quarter is $526 million, implying a decline of 6.9% year over year. The consensus estimate for its Performance Coatings Group is currently pegged at $1,565 million, which indicates a 1.4% rise. The same for SHW’s Americas Group is $3,145 million, which suggests an increase of 18.5% from the year-ago reported number.

Some Factors to Watch

Sherwin-Williams is expected to have benefited from higher net sales across its segments in the fourth quarter due to solid demand built-up. The company’s Americas Group is expected to have witnessed solid demand across its pro-architectural markets, including the new residential market. The company’s Performance Coatings Group is expected to have witnessed strong demand in North America, the company’s largest market. However, weak demand in Europe and China is likely to have adversely impacted its performance in the fourth quarter. The company is expected to have realized the benefits of cost savings as part of the cost initiative taken in the Performance Coatings Group and Consumer Brands Group.

In addition, higher year-over-year raw material costs are expected to have unfavorably impacted the company’s fourth-quarter performance. A seasonal slowdown in architectural demand is likely to have increased SG&A expenses in the fourth quarter. Higher Labor costs are also expected to have hurt the company’s performance in the fourth quarter.  

Zacks Model

Our proven model does not conclusively predict an earnings beat for Sherwin-Williams this season. 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.

Earnings Beat: Earnings ESP for Sherwin-William is -1.56%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at $1.85. 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 #3.

The SherwinWilliams Company Price and EPS Surprise

Stocks That Warrant a Look

Here are some companies in the construction space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:

United Rentals, Inc. URI, scheduled to release earnings on Jan 25, has an Earnings ESP of +7.91% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks Rank #1 stocks here.

The Zacks Consensus Estimate for United Rental’s fourth-quarter earnings has been revised 1% upward in the past 60 days. The consensus estimate for URI’s earnings for the fourth quarter is currently pegged at $10.04.

Fluor Corporation FLR, scheduled to release earnings on Feb 21, has an Earnings ESP of +2.48% and carries a Zacks Rank #2.

The Zacks Consensus Estimate for Fluor’s fourth-quarter earnings has been revised 5.9% upward in the past 60 days. The consensus estimate for FLR’s earnings for the fourth quarter is currently pegged at 54 cents.

Boise Cascade Company BCC, expected to release earnings on Feb 28, has an Earnings ESP of +0.90% and carries a Zacks Rank #3.

The Zacks Consensus Estimate for BCC's earnings for the fourth quarter is pegged at $2.97.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
 

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Fluor Corporation (FLR) : Free Stock Analysis Report

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