The Sherwin-Williams Company (SHW), headquartered in Cleveland, Ohio, develops, manufactures, distributes, and sells paints, coating, and related products to professional, industrial, commercial, and retail customers. Valued at $90.1 billion by market cap, the company’s Sherwin-Williams branded products are sold exclusively through a chain of more than 5,000 company-operated stores and facilities, while additional brands are sold through leading mass merchandisers, home centers, and more.
Shares of this leading provider of paint and coatings have outperformed the broader market considerably over the past year. SHW has gained 32.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 27.8%. However, in 2024, SHW’s stock rose 14.8%, compared to the SPX’s 17.8% 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 13.2% over the past year. Moreover, SHW’s double-digit gains on a YTD basis outshine the ETF’s 5.9% returns over the same time frame.
SHW’s bearish performance can be attributed to increased consumer demand for paint in American markets, leading to higher prices. Despite higher interest rates affecting home construction and renovations, consumers are increasingly undertaking smaller home improvement projects such as painting. SHW has observed a rise in demand from new residential customers and repaints from existing ones and anticipates this trend to persist.
On Jul. 23, SHW shares closed up more than 6% after reporting its Q2 results. Its adjusted EPS of $3.70 surpassed Wall Street expectations of $3.51. The company’s revenue was $6.3 billion, falling short of Wall Street forecasts of $6.4 billion. For Q3, the company expects revenue to be up a low-single-digit percentage year over year. However, SHW raised its full-year adjusted EPS and expects it to be between $11.10 and $11.40.
For the current fiscal year, ending in December, analysts expect SHW’s EPS to grow 10.5% to $11.44 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 24 analysts covering SHW stock, the consensus is a “Moderate Buy.” That’s based on 14 “Strong Buy” ratings, two “Moderate Buys,” seven “Holds,” and one “Moderate Sell.”
This configuration is more bullish than two months ago, with 13 analysts suggesting a “Strong Buy.”
On Aug. 2, Morgan Stanley (MS) analyst Vincent Andrews maintained a “Buy” rating on SHW with a price target of $375, implying a potential upside of 4.8% from current levels.
The mean price target of $365.65 represents a 2.1% premium to SHW’s current price levels. The Street-high price target of $418 suggests an upside potential of 16.8%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
