Sherwin-Williams Co reports results for the quarter ended September 30 - Earnings Summary

What happened

Sherwin-Williams reported adjusted earnings of $3.63 per share for the quarter ended September 30, below the $3.68 analysts expected. Revenue rose 7.9% to $6.86 billion, beating the $6.78 billion estimate. Reported EPS was $3.38 and net income was $821 million.

Confirmed

Global impact / market context

Profit per sale lagged what analysts expected even as revenue beat forecasts, so sales growth did not translate into the earnings beat Wall Street wanted. That gap can pressure the share price because investors pay for profit, not just revenue, and six analysts already cut estimates in the past 30 days.

Analyst inference

The shares had already risen 3.7% this quarter and 3.4% so far this year before this report, and the $392 median price target sits about 14.5% above the $335.16 last close. Most analysts rate the stock buy, so expectations were high going into this mixed result.

Analyst inference

What to watch

1. Six analysts negatively revised earnings estimates in the last 30 days, while the mean estimate rose about 1.7% over three months, so watch whether estimate cuts continue after this quarter's miss. Confirmed
2. Watch whether the company turns faster revenue growth into better profit per sale next quarter, since the revenue beat did not come with an earnings beat this time. Proposed
3. Watch whether the shares hold near the $335.16 last close, because a price near the $392 target depends on earnings catching up to analyst hopes. Analyst inference

Evidence

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