Sherwin-Williams Raises Q3 and 2020 View on Strong Demand

The Sherwin-Williams Company SHW provided an update on its third-quarter and 2020 view. It now expects consolidated net sales in the third quarter to rise 3-5% year over year. This compares to its earlier expectation of up or down a low-single-digit percentage for third-quarter consolidated net sales on a year-over-year basis.

The company expects third-quarter net sales in The Americas Group to be up a low-single-digit percentage compared with its earlier view of flat-to-up a low-single-digit percentage.

In The Consumer Brands Group, net sales in the third quarter are expected to rise by a low-twenties percentage compared with its prior guidance of up a low-double-digit percentage.

Net sales in The Performance Coatings Group for the third quarter is expected to be flat-to-down a low-single-digit percentage compared with its earlier view of down a low-to-mid-single-digit percentage.

For 2020, Sherwin-Williams now expects consolidated net sales to be flat-to-up slightly on a year-over-year basis. In its prior guidance issued in July, the company stated that consolidated net sales for 2020 to be roughly flat year over year.

Based on the above projections, the company expects earnings per share (EPS) between $20.96 and $21.46 for 2020 compared with prior guidance of $19.21-$20.71 issued in July.

Sherwin-Williams stated that demand for architectural coatings in the third quarter was stronger-than-expected, mainly driven by new residential, DIY and residential repaint units. In the industrial business, the company witnessed improving demand led by persistent strength in packaging and other segments, especially in automotive refinish and industrial wood. As such, the company’s sales expectations for the third quarter and 2020 have improved. The company now anticipates adjusted EPS for 2020 to increase 12.5% at the midpoint of the range year over year.

Sherwin-Williams is slated to release third-quarter 2020 results on Oct 27.

Shares of Sherwin-Williams have gained 29.5% in the past year compared with the industry’s 27.8% rise.

Zacks Rank & Key Picks

Sherwin-Williams currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Construction space are PGT, Inc. PGTI, TRI Pointe Group, Inc. TPH and Lennar Corporation LEN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PGT has an expected earnings growth rate of 19.5% for 2020. The company’s shares have gained 16.4% in the past year.

TRI Pointe Group has an expected earnings growth rate of 4.8% for 2020. Its shares have returned 17.5% in the past year.

Lennar has an expected earnings growth rate of 25.4% for 2020. The company’s shares have gained 41.7% in the past year.

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