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3 Reasons To Buy Sherwin-Williams (SHW) Ahead Of Its Earnings Report

Sherwin-Williams Company SHW, a manufacturer, distributor and retailer of paint and coatings, will release its Q2 earnings report on Wednesday.

Sherwin-Williams, a Zacks Rank #1 (Strong Buy), beat its earnings projections last quarter by an impressive 9.66%, and the company is poised to beat its earnings estimates again this quarter due to its strong Zacks Rank and Earnings ESP of 0.44%.

Additionally, the firm operates in the paints and related products industry, which currently sits in the top 9% on the Zacks Industry Rank.

But if that’s not enough to convince you of the company’s strength, here are three other reasons to remain optimistic on Sherwin-Williams as we approach its earnings report date:

1.       Expansion through acquisitions

Sherwin-Williams has extended its customer base and operations into various geographic areas through mounting acquisitions. The company purchased Comex in September 2013, which created a strategic fit for the company and enabled it to better serve its customers across key markets.

Furthermore, Sherwin-Williams acquired Valspar, one of its largest competitors, in June 2017. These acquisitions should allow Sherwin-Williams to strengthen its position as a leading paints and coatings provider globally, leveraging highly complementary offerings, strong brands and technologies. While the Valspar acquisition likely won’t impact this quarter’s earnings, the company’s M&A strategy is proof of its active management philosophy and strong industry lead.

2.       Sales Growth in Key Categories

Sherwin-Williams is projected to exhibit year-over-year growth throughout many segments of the company. For example, in Q2 2016, Sherwin-Williams’s Consumer Group reported sales of $474.5 million. According to our exclusive consensus estimates, the Consumer Group is expected to post revenues of $547.4 million for Q2 2017, which would represent 15.36% year-over-year growth in unit sales.

Additionally, Sherwin-Williams posted net sales of $499.2 million in its Global Group during Q2 2016. Our estimates project sales in this department to come in at $612.9 million, which would represent 22.78% year-over-year growth.

Finally, Sherwin-Williams reported net sales for its Paint Stores Group of $2.1 billion in Q2 of 2016. The Paint Stores Group in Q2 2017 is projected to bring in $2.3 billion, which would demonstrate a 9.52% year-over-year growth in net sales.

These important stock drivers are from our exclusive non-financial metrics consensus estimate file. These estimates are updated daily and are based on the independent research of expert stock analysts. Learn more here>>>

3.       Excellent Growth Metrics

Sherwin-Williams Company possesses superb growth ability due to numerous strong metrics the stock shows. For instance, Sherwin-Williams’ RoE of 61.58% and projected sales growth of 27.72% tower over the industry averages of 21.38% and 4.85%, respectively.

Furthermore, the company is projected to post sales of $3.45 billion and earnings of $4.55 per share, which represents year-over-year growth of 7.08% and 12.16%, respectively. In essence, Sherwin-Williams possesses excellent measures for company-wide growth, which bodes well for shareholders heading toward its report date. 

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