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What to Expect from Sherwin-Williams’ 2Q17 Revenue

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Jul. 14 2017, Published 7:04 a.m. ET

Sherwin-Williams’ 2Q17 revenue expectations

Sherwin-Williams (SHW) could post record 2Q17 revenue. As of July 12, 2017, analysts expect Sherwin-Williams to post revenue of $3.69 billion—an increase of 14.60% compared to the same quarter last year. Sherwin-Williams reported revenue of $3.22 billion in 2Q16.

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Driving factors

Sherwin-Williams’ expected revenue growth in 2Q17 is primarily driven by the completion of the Valspar acquisition. The deal closed on June 1, 2017, after obtaining approval from the Federal Trade Commission and the Canadian Competition Bureau. In the process of getting regulatory approval, Valspar divested its wood coatings business to Axalta (AXTA). It’s expected that only two months of revenues will be included for Sherwin-Williams because Valspar declared its last earnings in April 2017. Valspar follows November 1 to October 30 as its financial year.

Another factor that could drive Sherwin-Williams’ revenue is an increased number of paint stores. At the end of 2Q16, Sherwin-Williams’ paint store group had 4,117 stores. In the span of nine months, Sherwin-Williams added 73 stores under the segment, which took the number of stores to 4,190 at the end of 1Q17. Similarly, Sherwin-Williams added 40 stores in its Latin America coatings group for the same period, which took the tally to 342 stores at the end of 1Q17. External factors like continued growth in the construction space and weakness in the US dollar during 2Q17 could drive Sherwin-Williams’ revenue growth.

Investors can invest in the Materials Select Sector SPDR Fund (XLB) to get indirect exposure to Sherwin-Williams. XLB has invested 4.80% of its portfolio in Sherwin-Williams. The fund’s top holdings include Dow Chemical (DOW) and DuPont (DD) with weights of 12.0% and 11.90%, respectively.

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