Investors in The Sherwin-Williams Company (NYSE:SHW) had a good week, as its shares rose 4.2% to close at US$322 following the release of its annual results. Results were roughly in line with estimates, with revenues of US$23b and statutory earnings per share of US$9.25. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Sherwin-Williams' 26 analysts are now forecasting revenues of US$23.7b in 2024. This would be a modest 3.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 13% to US$10.68. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$23.7b and earnings per share (EPS) of US$10.61 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$318, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Sherwin-Williams at US$360 per share, while the most bearish prices it at US$214. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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 3.0% annualised growth rate until the end of 2024 being well below the historical 6.5% 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 4.4% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Sherwin-Williams.
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. The consensus price target held steady at US$318, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Sherwin-Williams going out to 2026, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Sherwin-Williams , and understanding it should be part of your investment process.
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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.