Sherwin-Williams (SHW): Q4 Earnings Align with Expectations

Sherwin-Williams (SHW), a leader in the paint and coating industry, reported Q4 CY2024 results that met Wall Street's revenue expectations. Despite flat year-over-year sales at $5.30 billion, the company's non-GAAP earnings per share (EPS) of $2.09 exceeded analysts' estimates by 1.6%.

Q4 CY2024 Highlights:

* Revenue: $5.30 billion (in line with expectations)
* Adjusted EPS: $2.09 (1.6% above estimates)
* Adjusted EBITDA: $788.6 million (10.1% below estimates)
* Adjusted EPS guidance for FY2025: $11.85 (5.8% below estimates)
* Operating Margin: 13% (in line with last year)

"Despite ongoing demand fluctuations, Sherwin-Williams delivered strong fourth quarter results," said CEO Heidi G. Petz.

Company Overview:

Sherwin-Williams manufactures and distributes paints, coatings, and related products. The company benefits from economies of scale, brand recognition, and strong customer relationships. However, its profitability can be affected by construction volumes and raw material costs.

Sales Growth:

Over the past five years, Sherwin-Williams' sales have grown at a 5.2% CAGR, which lags behind the industrial sector average. Recently, demand has slowed, with annualized revenue growth over the past two years at 2.1%.

Operating Margin:

Sherwin-Williams has maintained an average operating margin of 14.8% over the past five years. In Q4, the company's operating margin was 13%, indicating stable cost structure.

Earnings Per Share (EPS):

Sherwin-Williams' EPS has grown at a 10% CAGR over the past five years, outpacing its revenue growth. However, this growth has been partially driven by share buybacks.

Q4 Performance:

* EPS: $2.09 (up 1.6% year-over-year)
* Wall Street estimates: $2.06

Key Takeaways:

* Q4 results were met with mixed reception, as the EPS guidance missed estimates.
* Longer-term fundamentals and valuation should be considered when evaluating the stock's worthiness as a buy.