Sherwin-Williams Paints A Rosy Picture: Q2 Profit Soars Amid Sales Challenges

Sherwin-Williams Company SHW shares are trading higher after the company reported second-quarter FY24 results.

Adjusted earnings per share of $3.70, beating the Wall Street view of $3.48. 

Quarterly revenue rose 0.5% Y/Y to $6.27 billion, missing the analyst consensus of $6.33 billion. 

Revenue increased due to higher sales volumes in the Paint Stores and Performance Coatings Groups despite lower volumes in the Consumer Brands Group.

Net sales in Paint Stores Group rose 3.5% Y/Y, mainly due to low-single-digit volume growth and the continued impact of higher selling prices implemented earlier in the year.

Quarterly gross profit increased to $3.06 billion from $2.87 billion a year ago. Gross margin in the quarter under review expanded to 48.8% from 46.0% a year ago.

Repurchase & Dividend: The company returned cash of $1.34 billion to shareholders in the form of dividends and repurchases of 3.1 million shares of its common stock during the first six months of 2024. 

As of June 30, 2024, the company had authorization to buy back 36.5 million shares of its common stock through open market purchases.

Sherwin-Williams exited the quarter with cash and equivalents worth $200.0 million.

Outlook: Sherwin-Williams raised 2024 adjusted EPS guidance to $11.10-$11.40 (from $10.85-$11.35) versus the $11.37 estimate.

The company expects consolidated net sales to be up a low-single-digit percentage (vs. up low to mid-single digit percentage earlier) compared to the full year 2023.

For the third quarter, Sherwim-Williams expects net sales growth to be a low-single-digit percentage Y/Y.

President and Chief Executive Officer Heidi G. Petz said, “Led by strong performance in the Paint Stores Group, we continued to execute on our proven strategy across the Company to deliver consolidated sales within our expectations, gross margin expansion, EBITDA growth, and a 12.5% percent increase in adjusted diluted net income per share.”

“Consumer Brands Group sales continued to be impacted by soft North America DIY paint demand.”

Investors can gain exposure to the stock via Materials Select Sector SPDR XLB and Fidelity MSCI Materials Index ETF FMAT.

Price Action: SHW shares are up 4.20% at $335.89 at the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image: Shutterstock/ Sebastian Duda