Earnings Beat: The Sherwin-Williams Company Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

As you might know, The Sherwin-Williams Company (NYSE:SHW) recently reported its third-quarter numbers. The result was positive overall - although revenues of US$5.1b were in line with what the analysts predicted, Sherwin-Williams surprised by delivering a statutory profit of US$7.66 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Sherwin-Williams

Taking into account the latest results, the consensus forecast from Sherwin-Williams' 24 analysts is for revenues of US$19.0b in 2021, which would reflect a satisfactory 5.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 13% to US$23.17. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$18.9b and earnings per share (EPS) of US$23.34 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$731, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Sherwin-Williams, with the most bullish analyst valuing it at US$818 and the most bearish at US$380 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Sherwin-Williams' revenue growth is expected to slow, with forecast 5.6% increase next year well below the historical 12%p.a. growth over the last five years. Compare this to the 170 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.6% per year. Factoring in the forecast slowdown in growth, it looks like Sherwin-Williams is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$731, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Sherwin-Williams going out to 2024, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with Sherwin-Williams .

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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