Sherwin-Williams Company (NYSE:SHW) reported mixed Q4 financials. However, investors were unimpressed with management’s cautious outlook for 2023. Shares of this manufacturer and distributor of paint, coatings, and related products closed about 9% lower on January 26.
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Sherwin Williams’ revenue increased 9.8% year-over-year to $5.23 billion but missed Street’s forecast. Meanwhile, its adjusted EPS jumped 41% year-over-year to $1.89 and exceeded the consensus estimate of $1.86.
While the company ended 2022 with higher sales and earnings, weakness in the U.S. housing market and COVID-led challenges in China kept the company on the back foot. The company sees slowing existing home sales and persistently high inflation as headwinds for 2023. It expects its top line to stay flat or decline by a mid-single-digit rate in 2023.
With pressure on sales and higher wages, Sherwin Williams’ bottom line is projected to decline in 2023. It expects its adjusted EPS to be in the range of $7.95 to $8.65 in 2023, compared to $8.73 in 2022.
Is Sherwin-Williams a Buy or Sell?
While sales and margin headwinds could limit the upside in Sherwin-Williams stock in the short term, Wall Street analysts are cautiously optimistic about its prospects. It has received four Buy and six Hold recommendations for a Moderate Buy consensus rating. Further, these analysts’ average price target of $257.60 implies 14.46% upside potential.
Wall Street is cautiously optimistic about SHW, but hedge funds have increased their holdings in the last quarter. Our data shows that hedge funds bought 2.2M shares of SHW. Moreover, SHW stock sports a maximum Smart Score of “Perfect 10.”
