Yahoo Finance Earnings Miss: The Sherwin-Williams Company Missed EPS By 6.9% And Analysts Are Revising Their Forecasts
The Sherwin-Williams Company (NYSE:SHW) shares fell 4.7% to US$557 in the week since its latest yearly results. Revenues of US$18b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$16.49, missing estimates by 6.9%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Sherwin-Williams
Taking into account the latest results, the most recent consensus for Sherwin-Williams from 20 analysts is for revenues of US$18.5b in 2020, which is an okay 3.3% increase on its sales over the past 12 months. Statutory earnings per share are expected to leap 26% to US$21.10. In the lead-up to this report, analysts had been modelling revenues of US$18.7b and earnings per share (EPS) of US$21.79 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$604, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Sherwin-Williams analyst has a price target of US$680 per share, while the most pessimistic values it at US$340. 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.
Further, we can compare these estimates to past performance, and see how Sherwin-Williams forecasts compare to the wider market's forecast performance. It's pretty clear that analysts expect Sherwin-Williams's revenue growth will slow down substantially, with revenues next year expected to grow 3.3%, compared to a historical growth rate of 12% over the past five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 3.8% per year. So it's pretty clear that, while Sherwin-Williams's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Sherwin-Williams going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether Sherwin-Williams's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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