Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Home improvement professionals are reporting stable but soft trends in the third quarter of 2025, according to a recent survey conducted by KeyBanc. The survey indicates slight improvements in near-term and medium-term growth expectations, though overall sentiment remains muted. Paint manufacturer Sherwin-Williams (NYSE: NYSE:SHW), a prominent player in the sector with a market cap of $86.6 billion, has shown resilience with a 16.3% return over the past year. According to InvestingPro, the company maintains strong profitability with a 48.7% gross margin.
Consumer confidence has emerged as the primary concern among professionals, with 55% of respondents citing it as their top worry—the highest level recorded since the survey began in the fourth quarter of 2021. Cost inflation and labor shortages are also increasingly concerning for contractors in the sector. Despite these challenges, InvestingPro analysis shows Sherwin-Williams has maintained its dividend payments for 47 consecutive years, demonstrating long-term stability in the face of market uncertainties.
The survey reveals diverging trends between major retailers, with Home Depot (NYSE:HD) potentially tracking above Street expectations for second-quarter comparable sales, while Lowe’s (NYSE:LOW) likely faces more pressure from weather conditions thus far in the quarter. Among professionals surveyed, 68% cited Home Depot as their preferred big-box retailer compared to 32% for Lowe’s. In this competitive landscape, Sherwin-Williams has maintained its market position with steady revenue of $23 billion in the last twelve months and a return on equity of 70%.
Near-term growth expectations from professionals improved slightly to 1.6% from 0.9% in the previous quarter, while next-year growth expectations rose to 2.0% from 0.3%. However, large-sized professionals expect next-year growth of -1.8%, the lowest reading in the dataset since the third quarter of 2022.
The survey also found that professionals are not currently experiencing labor shortages from immigration or deportation policies, though a large percentage of respondents anticipate labor shortages in the future. Contractors who prefer Home Depot cited stronger near-term revenue outlook (+2.6%) compared to those preferring Lowe’s (-0.7%).
In other recent news, Sherwin-Williams reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of $2.25, which exceeded the forecasted $2.20. However, the company’s revenue of $5.31 billion fell short of the expected $5.42 billion. Despite the revenue miss, Sherwin-Williams reaffirmed its full-year sales and EPS guidance, highlighting strategic acquisitions and new product launches as key focus areas. Meanwhile, Citi downgraded Sherwin-Williams from Buy to Neutral, citing concerns about the housing market’s near-term outlook, and suggested that investors wait for a better entry point. The firm also lowered its price target for Sherwin-Williams to $385.00 from $405.00. On a different note, BofA Securities raised Sherwin-Williams’ stock price target slightly to $289.00 but maintained an Underperform rating, pointing to potential downside risks in the company’s end markets. In other industry news, Evercore ISI raised Walmart (NYSE:WMT)’s stock price target to $107, maintaining an Outperform rating, as the company prepares for its annual Shareholders’ Day. These developments provide investors with a snapshot of the current financial landscape for these companies.
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