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Could Sherwin-Williams Deliver Revenue Growth in 3Q16?

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Sherwin-Williams to announce its 3Q16 earnings

Sherwin-Williams (SHW) will be reporting its 3Q16 earnings on October 25, 2016, before the market opens. Peer PPG Industries (PPG) is scheduled to report its 3Q16 earnings on October 20. For a look at PPG Industries prior to the earnings release, read As PPG Industries Readies to Report, Here Are Some Key Updates.

RPM International (RPM) announced its fiscal 1Q17 earnings on October 5 and reported revenue of $1.3 billion. For an analysis of RPM’s fiscal 1Q17 earnings, read How Did RPM International Perform in Fiscal 1Q17?

Valspar (VAL), which will be acquired by Sherwin-Williams at the end of 2016, announced its 3Q16 earnings on September 7 and reported revenue of $1.1 billion. For a look at Valspar’s 3Q16 earnings, please refer to Valspar’s 3Q16 Earnings: The Details.

In this series, we will look into analysts’ estimates and recommendations, as well as company valuations, which can help investors to make decisions.

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Analysts’ revenue expectations

Based on Sherwin-Williams’s revenue guidance, analysts are expecting SHW to post revenue of $3.3 billion in 3Q16, compared with $3.2 billion in 3Q15. The projected revenue implies a revenue growth of 4.2% on a year-over-year basis. The projected revenue growth would be supported by SHW’s plan to open 90–100 new paint stores. In the first half of the year, SHW opened 45 new paint stores. However, it closed 14 stores, pushing the net new store count to 31.

Also, US new home sales data suggests a 20% rise in new home sales on a year-over-year basis in July and August, which is positive news for SHW’s architectural business. At this point, September’s data is not yet available.

Investing in Sherwin-Williams

Investors can get indirect exposure to Sherwin-Williams through the Materials Select Sector SPDR ETF (XLB), which had invested 4.1% of its portfolio in Sherwin-Williams as  of October 12, 2016. In the next part of this series, we’ll look at analysts’ expectations for Sherwin-Williams.

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