RBC (TSX:RY) Capital has adjusted its price target for Sherwin-Williams (NYSE: NYSE:SHW), a major paint and coatings manufacturer, to $446.00 from the previous $455.00.
Despite the reduction, the firm maintained its Outperform rating on the company's stock.
In a recent statement, RBC Capital acknowledged that while third-quarter results may have fallen short of investor expectations, Sherwin-Williams is poised to benefit from market share gains and its upcoming price increase set for January 2025.
The firm emphasized Sherwin-Williams' favorable position for a demand rebound and potential advantages amid competitors' portfolio reviews, referencing companies such as PPG, AkzoNobel, and BASF.
The firm's new EPS forecasts are approximately 2% lower, with the fourth quarter of 2024 dropping to $2.02 and the following years, 2024 and 2025, adjusted to $11.25 and $12.75 respectively, down from the initial $2.08, $11.38, and $13.00.
In other recent news, Sherwin-Williams has been the subject of several analyst adjustments. Baird raised its stock price target for Sherwin-Williams to $360, maintaining a Neutral rating, based on anticipated industry volume growth in 2025.
Goldman Sachs (NYSE:GS), on the other hand, retained its Buy rating and $410 price target, seeing potential for margin growth despite a challenging first half of 2025. Evercore ISI reduced its price target to $400 but maintained an Outperform rating, expressing optimism about Sherwin-Williams' prospects.
The company reported a 2.2% growth in same-store sales for the Paint Stores Group in the third quarter of 2024, despite a challenging first half of 2025. However, Sherwin-Williams' other two segments experienced sales declines due to unfavorable foreign exchange rates and reduced do-it-yourself volumes. The company also announced a 5% price increase for January, expected to contribute to margin expansion.
Sherwin-Williams reported consolidated sales growth, improved gross margins, and increased earnings per share in the third quarter of 2024, despite temporary store closures due to hurricanes. The company also returned $631 million to shareholders through dividends and share repurchases.
InvestingPro Insights
Complementing RBC Capital's analysis, InvestingPro data reveals that Sherwin-Williams has a market capitalization of $91.04 billion USD, reflecting its significant presence in the chemicals industry. The company's P/E ratio of 36.02 aligns with RBC Capital's valuation multiple, indicating that investors are willing to pay a premium for Sherwin-Williams' earnings potential.
InvestingPro Tips highlight Sherwin-Williams' strong dividend history, having raised its dividend for 32 consecutive years and maintained payments for 46 years. This consistent dividend growth supports RBC Capital's positive outlook on the company's long-term performance. Additionally, the company's management has been aggressively buying back shares, which could potentially boost earnings per share and support the stock price.
It's worth noting that Sherwin-Williams has demonstrated a high return over the last year, with a one-year price total return of 55.72%. This performance underscores the company's resilience and potential for growth, even as RBC Capital adjusts its near-term expectations.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips that could provide further insights into Sherwin-Williams' financial health and market position.
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