Sherwin-Williams (NYSE: SHW) earnings release for the 1st quarter of their 2020 fiscal year
Category: Stock Market and Sherwin-Williams
Date: 29 April 2020 Stock Price: $537.92 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Sherwin-Williams a global manufacturer and distributor of paints, coatings and related products to industrial, commercial and retail customers.
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About Sherwin-Williams
Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of paints, coatings and related products to professional, industrial, commercial, and retail customers. Sherwin-Williams manufactures products under well-known brands such as Sherwin-Williams®, Valspar®, HGTV HOME® by Sherwin-Williams, Dutch Boy®, Krylon®, Minwax®, Thompson's® Water Seal®, Cabot® and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams® branded products are sold exclusively through a chain of more than 4,900 company-operated stores and facilities, while the company's other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Performance Coatings Group supplies a broad range of highly-engineered solutions for the construction, industrial, packaging and transportation markets in more than 120 countries around the world. Sherwin-Williams shares are traded on the New York Stock Exchange (symbol: SHW).
Overview of Sherwin-Williams' 1st quarter 2020 earnings report
Data below refers to quarterly data unless specified otherwise:
- Revenues: $4.146 billion (up from $4.040 billion for the same period of the previous year)
- Revenues decreased by -2.1% over the last 12 months
- Cost of sales: $2.257 billion (down from $2.308 billion for the same period of the previous year)
- Cost of sales decreased by -2.2% over the last 12 months
- Net earnings: $321.7 million (up from $245.2 million for the same period of the previous year)
- Diluted earnings per share: $3.46 (up from $3.72 for the same period of the previous year)
- PE ratio: 38.8
- Diluted weighted-average shares outstanding: 92.859 million (down from 93.668 million for the same period of the previous year)
- Cash and cash equivalents: $238.5 million
- Cash and cash equivalents per share: $2.56
- Cash and cash equivalents makes up 0.47% of Sherwin-Williams' market capital
- Inventories: $1.954 billion
- Stockholders equity in Sherwin-Williams: $3.289 billion
- Stockholders equity per share in Sherwin-Williams: $35.41
- So Sherwin-Williams is trading a 15.2 times its stockholders equity which is well outside the expected range of between 2 and 4 which most firms ten to trade at.
- To put this in perspective the average firm in the S&P5oo has a price to book value of 3.34. Read more about the S&P 500 here
Sherwin-Williams' management commentary on their 1st quarter 2020 results
CLEVELAND, April 29, 2020 - The Sherwin-Williams Company (NYSE: SHW) announced its financial results for the first quarter ended March 31, 2020. Compared to the same period in 2019, consolidated net sales increased $105.8 million, or 2.6%, to $4.15 billion in three months. The increase in the quarter was due primarily to higher architectural paint sales volume in North American stores and increased sales in the packaging and coil divisions within our Performance Coatings Group across all regions, partially offset by impacts of COVID-19, continued demand softness in some end markets outside the U.S. and unfavorable currency translation rate changes. The estimated impact from COVID-19 on consolidated net sales during the quarter was approximately 1.5%. Currency translation rate changes decreased consolidated net sales by 1.4% in the first quarter. Diluted net income per share increased to $3.46 per share in the first quarter compared to $2.62 per share in the same period in 2019. First quarter 2020 included charges for acquisition-related amortization of $.62 per share. Currency translation rate changes decreased diluted net income per common share in the first quarter 2020 by $.05 per share. First quarter 2019 included charges of $.63 per share for acquisition-related amortization expense, $.08 per share for integration costs and $.27 per share for pension settlement expense.
Commenting on the results, John G. Morikis, Chairman and Chief Executive Officer, said, “My deepest thanks goes to the entire Sherwin-Williams team for their focus on the health and well-being of our employees, our customers, our communities and our Company as we manage through the ongoing COVID-19 pandemic. We delivered outstanding results in the first quarter driven by strong architectural paint demand to start the year, and minimal impacts from the pandemic in our North American stores business until late in the quarter. Sales grew year-over-year in line with our guidance, gross margin expanded 260 basis points to 45.6% and adjusted earnings per share increased 13.3% to $4.08 per share. Adjusted EBITDA grew 8.3% to $623.1 million, or 15.0% of sales compared to 14.2% of sales in the first quarter last year, and we continued to return cash to shareholders as we repurchased 1.7 million shares of our common stock in the first quarter. “In The Americas Group, same store sales growth was 7.4% in the quarter, with strong demand in all architectural end markets through mid-March, and segment margin improved by 140 basis points. In the Consumer Brands Group, higher volume sales through most of the Group’s North American retail customers was more than offset by our planned exit of business at ACE and softness in some international end markets. In the Performance Coatings Group, moderating raw material costs and good cost control drove margin expansion despite industrial demand that remained highly variable by end market and geography.
“We anticipate that the rapid deterioration of the U.S. and global economies experienced late in the first quarter due to the COVID-19 pandemic will most likely continue through the second quarter. We see no immediate, meaningful improvement ahead in most end markets we serve, and we are unable to predict when any noticeable improvement will occur. Given the trends and indicators we see at this time, we anticipate second quarter 2020 consolidated net sales will decrease by a low-to-mid-teens percentage versus the second quarter of 2019.
“For the full year 2020, we are revising our sales guidance to reflect uncertainties in the timing and pace of improvement in the U.S. and global operating environment. If economic conditions begin returning to normal in the third quarter 2020 and continue improving through the fourth quarter 2020, we anticipate full year consolidated net sales to be flat to down a low single digit percentage. If economic conditions do not materially improve until the first quarter 2021, we anticipate full year 2020 consolidated net sales to decrease by a mid-to-high single digit percentage. This is compared to our previous full year 2020 sales guidance of an increase of 2% to 4%. Considering our revised range of potential sales, we are revising our diluted net income per share guidance for 2020 to be in the range of $16.46 to $18.46 per share compared to our previous guidance of $19.91 to $20.71 per share and compared to $16.49 per share earned in 2019. Full year 2020 earnings per share includes acquisition-related amortization expense of approximately $2.54 per share, respectively. Full year 2019 earnings per share includes acquisition-related costs of $3.21 per share and other adjustments of $1.42 per share.”
“We anticipate that the rapid deterioration of the U.S. and global economies experienced late in the first quarter due to the COVID-19 pandemic will most likely continue through the second quarter. We see no immediate, meaningful improvement ahead in most end markets we serve, and we are unable to predict when any noticeable improvement will occur. Given the trends and indicators we see at this time, we anticipate second quarter 2020 consolidated net sales will decrease by a low-to-mid-teens percentage versus the second quarter of 2019.
“For the full year 2020, we are revising our sales guidance to reflect uncertainties in the timing and pace of improvement in the U.S. and global operating environment. If economic conditions begin returning to normal in the third quarter 2020 and continue improving through the fourth quarter 2020, we anticipate full year consolidated net sales to be flat to down a low single digit percentage. If economic conditions do not materially improve until the first quarter 2021, we anticipate full year 2020 consolidated net sales to decrease by a mid-to-high single digit percentage. This is compared to our previous full year 2020 sales guidance of an increase of 2% to 4%. Considering our revised range of potential sales, we are revising our diluted net income per share guidance for 2020 to be in the range of $16.46 to $18.46 per share compared to our previous guidance of $19.91 to $20.71 per share and compared to $16.49 per share earned in 2019. Full year 2020 earnings per share includes acquisition-related amortization expense of approximately $2.54 per share, respectively. Full year 2019 earnings per share includes acquisition-related costs of $3.21 per share and other adjustments of $1.42 per share.”
Sherwin-Williams (NYSE: SHW) stock price history
The image below, obtained from Google, shows the stock price history of Sherwin-Williams since its listing And it's been a pretty good time for Sherwin-Williams stockholders. 5 years ago the stock was trading at around $228.90 a stock and its currently trading at $566.89 a stock. That's a decent return of 34.9% provided to Sherwin-Williams stockholders over the last 3 years.
The stock of Sherwin-Williams is trading at closer to its 52 week high of $599.95 and far away from its 52 week low of $325.43 which to us is a clear indication that the short term momentum and sentiment of Sherwin-Williams stock is very positive.
The stock of Sherwin-Williams is trading at closer to its 52 week high of $599.95 and far away from its 52 week low of $325.43 which to us is a clear indication that the short term momentum and sentiment of Sherwin-Williams stock is very positive.
Recent Google searches for Sherwin-Williams stock price and SHW stock price
The graphic below shows the trend in searches for Sherwin Willians stock price and SHW stock price over the last 12 months.
Recent coverage of Sherwin-Williams
The extract below covers the latest dividend announcement from Sherwin-Williams is as obtained from Nasdaq.com
(RTTNews) - Sherwin-Williams Co (SHW) revealed earnings for its first quarter that rose from last year. The company's bottom line totaled $321.7 million, or $3.46 per share. This compares with $245.2 million, or $2.62 per share, in last year's first quarter. Analysts had expected the company to earn $3.94 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items. The company's revenue for the quarter rose 2.7% to $4.15 billion from $4.04 billion last year.
Read the original article here
(RTTNews) - Sherwin-Williams Co (SHW) revealed earnings for its first quarter that rose from last year. The company's bottom line totaled $321.7 million, or $3.46 per share. This compares with $245.2 million, or $2.62 per share, in last year's first quarter. Analysts had expected the company to earn $3.94 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items. The company's revenue for the quarter rose 2.7% to $4.15 billion from $4.04 billion last year.
Read the original article here
Sherwin-Williams (NYSE: SHW) latest stock valuation
So what is Sherwin-Williams stock worth based on the release of their latest earnings report? Based on Sherwin-Williams' latest earnings report and their outlook our valuation models provide a target (full value) price of Sherwin-Williams stock at $357.40 a stock. Therefore we believe the stock of Sherwin-Williams is overvalued at its current price of $537.90
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target (full value) price which in this case is $357.40 so we believe a good entry point into Sherwin-Williams' stock would be at $321.70 or below. Considering the fact that Sherwin-Williams is trading at well above our suggested entry point into the group's stock we rate Sherwin-Williams as a sell.
We expect the stock of Sherwin-Williams to decline from current levels in coming weeks and months to levels closer to our target (full value) price as we cannot see then group holding on to its current stock price based on their 1st quarter 2020 earnings release.
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target (full value) price which in this case is $357.40 so we believe a good entry point into Sherwin-Williams' stock would be at $321.70 or below. Considering the fact that Sherwin-Williams is trading at well above our suggested entry point into the group's stock we rate Sherwin-Williams as a sell.
We expect the stock of Sherwin-Williams to decline from current levels in coming weeks and months to levels closer to our target (full value) price as we cannot see then group holding on to its current stock price based on their 1st quarter 2020 earnings release.
Next earnings release date for Sherwin-Williams
Sherwin-Williams is expected to release their 2nd quarter earnings report for their 2020 fiscal year in late July 2020