The Sherwin-Williams Company (SHW), valued at $95.4 billion by market cap, develops and sells paints and coatings. Its flagship products are sold through 5,000+ company-operated stores, with other brands available via major retailers.
Shares of this paint manufacturing titan have outperformed the broader market considerably over the past year. SHW has gained 43.1% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 30.4%. However, in 2024, SHW’s stock rose 21.5%, compared to the SPX’s 23.1% rise on a YTD basis.
Zooming in further, SHW’s outperformance looks more pronounced compared to the Vanguard Materials Index Fund ETF Shares (VAW). The exchange-traded fund has gained about 16.4% over the past year. Moreover, SHW’s double-digit gains on a YTD basis outshine the ETF’s 7.5% returns over the same time frame.
On Nov. 4, Sherwin-Williams' shares jumped 4% following news it would join the Dow Jones Industrial Average, replacing Dow Inc. (DOW), effective November 8.
However, on Oct. 22, SHW posted its Q3 earnings, and the stock dropped 5.3%. Its adjusted EPS of $3.37 missed Wall Street's $3.56 estimate. Revenue was $6.16 billion, below the expected $6.23 billion. The company anticipates full-year earnings between $11.10 and $11.40 per share.
For the current fiscal year, ending in December, analysts expect SHW’s EPS to grow 9.4% to $11.32 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in two of the last four quarters while missing the forecast on two other occasion.
Among the 24 analysts covering SHW stock, the consensus is a “Moderate Buy.” That’s based on 13 “Strong Buy” ratings, two “Moderate Buys,” eight “Holds,” and one “Moderate Sell.”
This configuration is less bullish than two months ago, with 14 analysts suggesting a “Strong Buy.”
On November 7, Evercore Inc. (EVR) analyst Greg Melich maintained a “Buy” rating on Sherwin-Williams with a $420 price target.
The mean price target of $397.18 represents a 4.8% premium to SHW’s current price levels. The Street-high price target of $450 suggests an upside potential of 18.7%.
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