Insights

Why Sherwin-Williams Stock Is Bucking the Market Today

What happened
While the S&P 500 and Nasdaq Composite are down 2% and 3%, respectively, today, one well-known name bucking that downtrend in a big way was Sherwin-Williams (NYSE: SHW). The more than 150-year-old industrial supplier of paints and coatings reported its first-quarter financial results this morning, and investors thought it was quite a bit better than watching paint dry. After rising as much as 11.3% at the day’s highs, Sherwin-Williams shares were still 8.9% higher as of 2:37 p.m. ET.
So what
While net earnings were down slightly from the year-ago period, the $1.61 per share in adjusted net income beat analyst estimates by $0.07 per share. More importantly, the company predicted net sales will increase by a percentage in the low to mid-teens for the second quarter compared with the prior year. The analyst consensus for sales was to grow less than 10%, according to FactSet Research Systems.

Image source: Getty Images.

Now what
Chairman and CEO John G. Morikis stated, “We believe we are through the worst of the industry supply chain challenges and the incremental architectural capacity we added late last year positions us well for the upcoming architectural painting season.” 
That confidence also comes from the belief that an improvement in margins should soon materialize from previously announced price increases that “have not yet fully caught up to offset highly elevated raw material costs,” he said.
The maker of the Valspar and Dutch Boy brands had seen its share price decline by about 30% in 2022, prior to today’s announcement. Many investors see that as a good opportunity and are going against the market grain today, driving shares meaningfully higher.
Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns and recommends FactSet Research Systems. The Motley Fool recommends Sherwin-Williams. The Motley Fool has a disclosure policy. –

What happened

While the S&P 500 and Nasdaq Composite are down 2% and 3%, respectively, today, one well-known name bucking that downtrend in a big way was Sherwin-Williams (NYSE: SHW). The more than 150-year-old industrial supplier of paints and coatings reported its first-quarter financial results this morning, and investors thought it was quite a bit better than watching paint dry. After rising as much as 11.3% at the day’s highs, Sherwin-Williams shares were still 8.9% higher as of 2:37 p.m. ET.

So what

While net earnings were down slightly from the year-ago period, the $1.61 per share in adjusted net income beat analyst estimates by $0.07 per share. More importantly, the company predicted net sales will increase by a percentage in the low to mid-teens for the second quarter compared with the prior year. The analyst consensus for sales was to grow less than 10%, according to FactSet Research Systems.

Image source: Getty Images.

Now what

Chairman and CEO John G. Morikis stated, “We believe we are through the worst of the industry supply chain challenges and the incremental architectural capacity we added late last year positions us well for the upcoming architectural painting season.” 

That confidence also comes from the belief that an improvement in margins should soon materialize from previously announced price increases that “have not yet fully caught up to offset highly elevated raw material costs,” he said.

The maker of the Valspar and Dutch Boy brands had seen its share price decline by about 30% in 2022, prior to today’s announcement. Many investors see that as a good opportunity and are going against the market grain today, driving shares meaningfully higher.

Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns and recommends FactSet Research Systems. The Motley Fool recommends Sherwin-Williams. The Motley Fool has a disclosure policy.

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