SHW Q3 Deep Dive: Share Gains and Cost Controls Offset Ongoing Market Weakness

Paint and coating manufacturer Sherwin-Williams (NYSE:SHW) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 3.2% year on year to $6.36 billion. The company expects next quarter’s revenue to be around $5.43 billion, close to analysts’ estimates. Its non-GAAP profit of $3.59 per share was 4.4% above analysts’ consensus estimates.

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StockStory’s Take

Sherwin-Williams delivered third-quarter results that exceeded market expectations, with management crediting disciplined cost control and targeted growth investments for outperformance despite ongoing softness in end-market demand. CEO Heidi Petz emphasized, “Our strategy continues to resonate with professional painting contractors and manufacturers who now more than ever are looking for partners that can provide them with predictability and reliability.” The company highlighted strong execution in its Paint Stores Group, citing market share gains and consistent results across protective, residential repaint, and commercial segments, even as overall demand remained sluggish.

Looking ahead, Sherwin-Williams’ outlook is shaped by continued caution about a lack of demand recovery, but management is focusing on pricing actions, efficiency initiatives, and selective investments in new stores and sales representatives. CFO Allen Mistysyn noted the company has announced a 7% price increase for its Paint Stores Group, stating, “We are going to be very aggressive in growing the business with new account growth and share of wallet.” Management expects cost headwinds from raw materials and labor but aims to offset these through disciplined pricing and operational efficiency.

Key Insights from Management’s Remarks

Management attributed the company’s above-expectation performance to targeted growth initiatives, tight cost controls, and strategic responses to a competitive landscape that remains in flux.

• Paint Stores Group market outperformance: The Paint Stores Group grew sales by a mid-single-digit percentage, driven by both price mix and volume gains, and management said this reflected clear returns on recent growth investments rather than any broad-based market improvement.
• Residential repaint resilience: Sales in the residential repaint segment increased by mid-single digits for the quarter, with management emphasizing that this growth was achieved despite ongoing declines in existing home sales—highlighting the effectiveness of new account and share-of-wallet initiatives.
• Product mix and margin control: In the Consumer Brands Group, a favorable shift toward premium products and strong cost control helped expand adjusted segment margins, even as overall volume declined in the North American DIY channel and foreign exchange was a modest headwind.
• Acquisition and channel optimization: The acquisition of Suvinil in Brazil was completed, adding to the company’s Latin American portfolio and offering new operational synergies. Management also continued optimizing its retail channel by closing underperforming stores and reallocating volume to qualified dealers.
• Aggressive cost actions: Sherwin-Williams paused company matching contributions to its 401(k) plan beginning October 1, citing the move as a temporary measure to preserve jobs and redirect resources toward customer-facing growth priorities during an uncertain demand environment.

Drivers of Future Performance

Sherwin-Williams anticipates ongoing demand weakness but plans to drive growth through aggressive pricing, continued investment in new stores and reps, and operational efficiency.

• Pricing actions in a soft market: Management announced a 7% price increase for the Paint Stores Group effective next year, with targeted increases in other segments, aiming to offset rising raw material and labor costs. The company expects pricing effectiveness to be tempered by challenging market dynamics and customer mix.
• Investment in growth and efficiency: The company will continue opening new stores and hiring additional sales representatives to capitalize on market share opportunities, while also pursuing cost-saving and simplification initiatives to counter inflation in healthcare and wages.
• Limited demand recovery expected: Management’s demand outlook remains cautious, with few signs of near-term improvement across key end markets. The company’s planning assumes a “softer for longer” environment, focusing on outperforming competitors and preparing for eventual volume recovery.

Catalysts in Upcoming Quarters

Moving forward, the company’s ability to capture additional market share through new store openings and exclusive contracts, the effectiveness of recently announced price increases in offsetting input cost inflation, and early financial impacts from the integration of Suvinil in Latin America will be important to monitor. Progress on cost-saving initiatives and continued discipline in growth investments will also be important indicators to watch.

Sherwin-Williams currently trades at $355.45, up from $336.12 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).

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