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Investing.com - Mizuho (NYSE:MFG) lowered its price target on Sherwin-Williams (NYSE:SHW) to $385 from $400 on Wednesday while maintaining an Outperform rating, citing weaker-than-expected quarterly results and reduced full-year guidance. The $85 billion market cap paint manufacturer, currently trading at a P/E ratio of 33.9x, is showing signs of being overvalued according to InvestingPro analysis.
The paint manufacturer reported second-quarter adjusted earnings per share of $3.38, falling short of Mizuho’s estimate of $3.85 and the consensus forecast of $3.81. Same-store sales increased by just 0.8% year-over-year, reflecting modest price increases offset by a low-single-digit percentage decline in volume. Despite these challenges, Sherwin-Williams maintains its position as a dividend aristocrat, having raised dividends for 32 consecutive years, with a current yield of 0.93%.
Sherwin-Williams reduced its full-year EPS guidance range to $11.20-$11.50 from the previous $11.65-$12.05, while also providing sales guidance for the third quarter of approximately $6.2 billion, below analyst expectations of $6.3-6.4 billion. Fourth-quarter implied sales guidance of around $5.3 billion also fell short of the $5.5 billion consensus.
The company faced additional headwinds from earlier-than-anticipated costs related to new headquarters and R&D site completions, as well as restructuring expenses. Core SG&A costs rose 3.8% compared to the same period last year.
Mizuho trimmed its EPS estimates for 2025, 2026, and 2027 to $11.25, $12.65, and $14.25, respectively, citing "ongoing softness in housing activity." The firm noted that Sherwin-Williams still expects its $1.15 billion acquisition of BASF’s Brazil architectural paint business to close in the second half of 2025.
In other recent news, Sherwin-Williams reported its second-quarter earnings for 2025, which showed a miss in earnings per share (EPS) expectations but a slight beat in revenue forecasts. The company posted an EPS of $3.38, falling short of the anticipated $3.80, representing an 11.05% negative surprise. However, revenue slightly exceeded expectations, coming in at $6.31 billion compared to the forecasted $6.30 billion. Additionally, Evercore ISI has adjusted its price target for Sherwin-Williams to $380 from $400, maintaining an Outperform rating. This change was attributed to challenging market conditions and concerns about volume growth, which are essential for earnings expansion. Similarly, Citi lowered its price target to $375 from $385, keeping a Neutral rating on the stock. Citi described the current market as a "critical inflection point" for North American architectural coatings, highlighting Sherwin-Williams’ investment in customer-facing growth initiatives. These developments reflect the company’s ongoing efforts to navigate a challenging market landscape.
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