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Investing.com - Evercore ISI has reiterated an Outperform rating and $400.00 price target on Sherwin-Williams (NYSE:SHW), a $85 billion market cap chemicals giant, ahead of the company’s second-quarter earnings report scheduled for Tuesday, July 22. According to InvestingPro data, the stock currently trades at a premium valuation with a P/E ratio of 31.77x.
The research firm indicates that consensus expectations of $3.80 earnings per share for the second quarter appear reasonable, while it maintains a slightly lower estimate of $3.75. Evercore ISI has trimmed its full-year EPS estimate to $11.85, which falls at the midpoint of Sherwin-Williams’ full-year guidance range of $11.65-$12.05. The company has demonstrated solid financial performance with a gross profit margin of 48.72% and annual revenue of $23 billion in the last twelve months.
Evercore ISI believes management will likely be conservative in its outlook, particularly ahead of a sell-side dinner planned for late August, but does not expect the company to lower its full-year guidance unless market trends deteriorate further. The firm notes that most end markets remained soft through the second quarter.
The research firm highlights Sherwin-Williams’ share gains across segments as allowing some growth even in down markets, along with price/mix tailwinds and potential leverage when volume growth returns. Sherwin-Williams currently trades at a 25% premium to the S&P 500, which Evercore ISI describes as in the middle of its 10-year historical range.
Market focus during the upcoming earnings call will likely center on early third-quarter demand trends, raw material growth assumptions between 1-3%, and the potential for additional pricing beyond the 5% increase implemented in January, according to the research firm. InvestingPro analysis shows the company has maintained dividend payments for 47 consecutive years, demonstrating strong financial stability. For deeper insights into SHW’s valuation metrics and 12 additional ProTips, consider exploring the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Sherwin-Williams announced a regular quarterly dividend of $0.79 per share, maintaining its consistent dividend payment schedule. This decision reflects the company’s ongoing commitment to its dividend policy. Meanwhile, Citi downgraded Sherwin-Williams from Buy to Neutral, citing concerns about the U.S. housing market and potential impacts from new tariffs. Citi analysts noted elevated mortgage rates and delayed interest rate cuts as factors affecting the company’s near-term outlook. Despite these challenges, Citi acknowledged Sherwin-Williams’ long-term market share growth but suggested investors wait for a better entry point. Additionally, Evercore ISI raised Walmart (NYSE:WMT)’s stock price target to $107, highlighting the company’s stock performance and strategic initiatives. They emphasized Walmart’s focus on sustaining share gain momentum and driving positive traffic. Evercore ISI also highlighted Walmart’s potential margin expansion and future growth prospects.
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