GET DAILY SIGNALSSherwin-Williams (SHW) Reports +7.9% Sales Growth in Q3 Amid Margin Pressure
Key Takeaways
- Consolidated net sales rose 7.9% year over year to $6.86 billion, topping consensus estimates of roughly $6.78 billion.
- Adjusted diluted earnings per share (EPS) increased 1.1% to $3.63, modestly below analyst expectations.
- Reported diluted EPS came in at $3.38 (up 0.9%), while net income declined 1.5% to $821.0 million.
- All three reportable segments grew, led by the Consumer Brands Group's 21.7% jump driven by the Suvinil acquisition.
- Gross margin contracted as higher raw material and supply chain costs, plus Suvinil dilution, weighed on profitability.
- Full-year 2026 adjusted diluted EPS guidance was narrowed to $11.85–$12.15, with the $12.00 midpoint unchanged.
Why These Earnings Matter
The Sherwin-Williams Company's quarterly results offer a useful window into housing, construction, and industrial trends, given its role as one of the largest paint and coatings producers. This third-quarter update came against a backdrop of subdued underlying demand in many end markets, so the company's ability to deliver above-market growth stood out. I was particularly interested in whether pricing actions and share gains could counter ongoing cost inflation. The numbers showed resilient top-line momentum but also ongoing margin pressure, a dynamic that has shaped the stock's story through 2026. The report also gave some early clues about management's thinking for 2027.
Breaking Down the Q3 Numbers
For the third quarter ended September 30, 2026, SHW reported consolidated net sales of $6.86 billion, up 7.9% from $6.36 billion a year earlier and ahead of the roughly $6.78 billion consensus. Reported diluted EPS rose 0.9% to $3.38, while adjusted diluted EPS increased 1.1% to $3.63, slightly below analyst expectations of about $3.65. Net income declined 1.5% to $821.0 million. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 3.4% to $1.39 billion, with adjusted EBITDA up 3.3% to $1.40 billion.
By segment, the Paint Stores Group (PSG) grew sales 4.7% to $4.02 billion, with same-store sales up 3.9%. The Consumer Brands Group (CBG) jumped 21.7% to $937.4 million, largely reflecting the Suvinil acquisition. The Performance Coatings Group (PCG) rose 8.8% to $1.90 billion. However, gross margin contracted to 47.8% from 49.2%, pressured by raw material costs and acquisition dilution. Management narrowed full-year 2026 adjusted diluted EPS guidance to $11.85–$12.15 and maintained the $12.00 midpoint. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Market Reaction and Investor Sentiment
SHW shares traded lower following the release, as investors weighed a top-line beat against a modest earnings shortfall and softer margins. The reaction reflected a familiar theme: strong sales execution and market-share gains were overshadowed by the timing gap between price increases and rising input costs. Management acknowledged that sales-to-earnings conversion in the quarter fell below its own standard, a candid admission that likely contributed to the cautious tone. Sentiment heading into the report had anticipated continued volume resilience, so the margin compression and the company's "softer for longer" demand commentary were the primary points of concern. The narrowing of guidance around an unchanged midpoint provided some reassurance but did little to offset near-term profitability worries.
Forward Outlook and Key Factors to Monitor
Looking ahead, Sherwin-Williams expects fourth-quarter 2026 consolidated sales to increase by a mid-single-digit percentage, keeping full-year sales growth in the mid-to-high-single-digit range. Management signaled muted demand into 2027, noting that leading indicators point to few positive catalysts in the near term.
A central factor to watch is the realization of the 8% price increase that took effect September 1, 2026, within the Paint Stores Group. Full realization is expected to ramp through the first half of 2027, and how quickly pricing closes the gap with raw material inflation will be critical for margin recovery. Management projects raw material inflation in the low-to-mid-single-digit range for 2027, with the heaviest impact concentrated in the first half of the year.
Cost discipline is another key theme. The company expects approximately $75 million in savings in 2027, including $25 million from restructuring actions already taken. Investors should also monitor the continued integration of Suvinil, which has been dilutive to gross margin, and the planned return to 80–100 net new store openings in 2027. As demand remains choppy, volume trends in protective and marine, packaging, and residential repaint will offer the clearest read on underlying momentum. From what I see, these elements will shape the stock's path over the coming quarters.
Using AI Tools for Deeper Analysis
In my research process, I often turn to Tickeron’s AI Screener to quickly filter opportunities across materials and coatings names and compare technical and fundamental signals side by side. It helps surface comparable ideas without spending hours on manual screens, which has been useful when evaluating names like SHW against peers.
Disclaimer
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
SHW's MACD Histogram just turned positive
The Moving Average Convergence Divergence (MACD) for SHW turned positive on October 08, 2026. Looking at past instances where SHW's MACD turned positive, the stock continued to rise in 30 of 50 cases over the following month. The odds of a continued upward trend are 60%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 14, 2026. You may want to consider a long position or call options on SHW as a result. In 40 of 83 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 48%.
SHW moved above its 50-day moving average on October 20, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for SHW crossed bullishly above the 50-day moving average on October 23, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 8 of 17 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 47%.
Following a +2.86% 3-day Advance, the price is estimated to grow further. Considering data from situations where SHW advanced for three days, in 169 of 302 cases, the price rose further within the following month. The odds of a continued upward trend are 56%.
Bearish Trend Analysis
The 10-day RSI Indicator for SHW moved out of overbought territory on October 23, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 36 similar instances where the indicator moved out of overbought territory. In 18 of the 36 cases, the stock moved lower in the following days. This puts the odds of a move lower at 50%.
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 7 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
The 50-day moving average for SHW moved below the 200-day moving average on October 22, 2026. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where SHW declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 64%.
SHW broke above its upper Bollinger Band on October 22, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for SHW entered a downward trend on October 07, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 18 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is 35 (best 1 - 100 worst), indicating steady price growth. SHW’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is 49 (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 69 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. SHW’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 82, placing this stock better than average.
The Tickeron Seasonality Score of 95 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of 100 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: SHW's P/B Ratio (21.107) is slightly higher than the industry average of (2.372). P/E Ratio (30.636) is within average values for comparable stocks, (-17.554). Projected Growth (PEG Ratio) (2.143) is also within normal values, averaging (1.548). Dividend Yield (0.010) settles around the average of (0.040) among similar stocks. P/S Ratio (3.266) is also within normal values, averaging (48.960).
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a company which engages in the development, manufacture, distribution and sale of paint, coatings and related products
Industry ChemicalsSpecialty
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