The Sherwin-Williams Company Just Beat EPS By 6.0%: Here's What Analysts Think Will Happen Next

As you might know, The Sherwin-Williams Company (NYSE:SHW) recently reported its second-quarter numbers. The result was positive overall - although revenues of US$6.3b were in line with what the analysts predicted, Sherwin-Williams surprised by delivering a statutory profit of US$3.50 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Sherwin-Williams

Following last week's earnings report, Sherwin-Williams' 25 analysts are forecasting 2024 revenues to be US$23.3b, approximately in line with the last 12 months. Per-share earnings are expected to increase 6.1% to US$10.57. In the lead-up to this report, the analysts had been modelling revenues of US$23.6b and earnings per share (EPS) of US$10.55 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target rose 6.2% to US$358despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Sherwin-Williams' earnings by assigning a price premium. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Sherwin-Williams at US$418 per share, while the most bearish prices it at US$233. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Sherwin-Williams' revenue growth is expected to slow, with the forecast 2.6% annualised growth rate until the end of 2024 being well below the historical 6.6% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that Sherwin-Williams is also expected to grow slower than other industry participants.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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. We have forecasts for Sherwin-Williams going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Sherwin-Williams that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com