Why Sherwin-Williams (SHW) Stock Is Falling Today

What Happened?

Shares of paint and coating manufacturer Sherwin-Williams (NYSE:SHW) fell 3.3% in the morning session after the company reported its second-quarter financial results and lowered its full-year earnings guidance. 

The paint and coatings manufacturer missed Wall Street's expectations for second-quarter adjusted earnings per share, reporting $3.38 against an anticipated $3.76 to $3.81. While revenue of $6.31 billion was in line with forecasts, the company's profitability declined. Diluted net income per share fell 14.3% to $3.00 compared to the prior year. Citing a "choppy" and "softer for longer" demand environment, Sherwin-Williams cut its full-year adjusted earnings per share forecast to a range of $11.20 to $11.50, down from a previous, more optimistic outlook. The company noted that it expects demand weakness to persist or even worsen in the second half of the year. Higher-than-expected restructuring costs and expenses related to its new headquarters also impacted the quarter's results. The guidance cut signaled to investors that macroeconomic headwinds are affecting consumer and commercial demand in housing and construction markets.

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What Is The Market Telling Us

Sherwin-Williams’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock dropped 9% on the news that the company reported underwhelming third-quarter earnings results, with EBITDA and EPS falling short of Wall Street's estimates. Revenue was also underwhelming and came in approximately in line with expectations, as management called out "choppiness in the demand environment." Overall, this was a softer quarter.

Sherwin-Williams is down 0.2% since the beginning of the year, and at $332.50 per share, it is trading 16.8% below its 52-week high of $399.71 from November 2024. Investors who bought $1,000 worth of Sherwin-Williams’s shares 5 years ago would now be looking at an investment worth $1,594.

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