Sherwin-Williams Beats Estimates, Shares Rise

Sherwin-Williams SHW reported second quarter earnings that beat analyst expectations Thursday. Shares of the company rose more than 3 percent in midday trading in New York.

In the second quarter, Sherwin-Williams earned $2.17 per share, beating analyst estimates of $2.13 per share by about 2 percent. The company also increased full-year EPS guidance to $6.20 to $6.40 from $5.75 to $6.05 that it had estimated in April.

The maker of paint and coating products, including the Dutch Boy and Minwax brands, has continued to post strong sales growth in recent quarters despite shaky consumer confidence and a sluggish housing market. Revenue across stores increased 9.3 percent $2.57 billion even as currency effects contributed to a 5 percent reduction in revenue. Further, margins improved in the quarter, growing to 44.7 percent from 43.4 percent in the prior quarter.

The strong numbers bode well for the housing sector and for do-it-yourself companies. As the housing market appears to be bottoming, paint sales may climb. Thus, Sherwin-Williams could be set to see further earnings growth. However, data released today showed renewed weakness in the sector, as existing home sales fell to 4.37 million in June from 4.55 million in May. Economists had been expecting 4.62 million existing homes to be sold in June.

Should the housing market continue to deteriorate, paint sales may fall. However, stronger data on the sector would be bullish for Sherwin.