The Sherwin-Williams 2025 Q2 Earnings Misses Targets as Net Income Declines 15.2%

The Sherwin-Williams Company (SHW), ranking 175th by market capitalization, reported its fiscal 2025 Q2 earnings on July 22, 2025. The results revealed a slight increase in revenue, beating the analyst consensus, but the company missed expectations for adjusted earnings per share. As a result of softer architectural sales volumes and ongoing supply chain inefficiencies, Sherwin-Williams has lowered its full-year adjusted earnings guidance. The company remains committed to its long-term growth strategy despite short-term challenges.

Revenue

The Sherwin-Williams Company reported a 0.7% increase in total revenue for fiscal 2025 Q2, amounting to $6.31 billion, up from $6.27 billion in the same quarter of 2024. Within its business segments, the Paint Stores Group generated $3.70 billion, the Consumer Brands Group contributed $809.40 million, and the Performance Coatings Group added $1.80 billion. Administrative revenue stood at $1.80 million, leading to consolidated totals of $6.31 billion.

Earnings/Net Income

The company's EPS decreased by 14.4% to $3.04 in 2025 Q2, compared to $3.55 in 2024 Q2. Net income also declined significantly, reaching $754.70 million in 2025 Q2, down 15.2% from the $889.90 million reported in 2024 Q2. The decline in EPS indicates a challenging quarter for Sherwin-Williams.

Price Action

The stock price of The Sherwin-Williams edged up 2.61% during the latest trading day, increased 0.30% during the most recent full trading week, and rose 2.59% month-to-date.

Post-Earnings Price Action Review

A strategy of buying Sherwin-Williams stock when earnings beat expectations and holding for 30 days delivered moderate returns, yet underperformed the benchmark. This approach achieved a 73.85% return, compared to the benchmark's 88.32% return. The strategy's Sharpe ratio was 0.44, indicating a reasonable risk-adjusted return. Notably, the strategy had a maximum drawdown of 0.00%, showing it avoided significant losses during market downturns. However, the returns, while positive, fell short of broader market performance, suggesting limitations in capturing gains from earnings beats.

CEO Commentary

Heidi G. Petz, Chairman, CEO & President, acknowledged that the quarter was not perfect but emphasized the company's disciplined strategy aimed at delivering long-term market outperformance. She highlighted stalled demand momentum in key markets and announced a doubling of restructuring initiatives to approximately $105 million, expecting annual savings of about $80 million. Petz expressed confidence in leveraging the company's direct distribution model to gain market share amid competitive disruptions and reiterated aggressive investments in the Paint Stores Group.

Guidance

Sherwin-Williams has revised its full-year adjusted earnings guidance downward due to softer architectural sales volumes and supply chain inefficiencies. The company now anticipates a capital expenditure of approximately $730 million, reduced from $900 million, while targeting a low single-digit percentage increase in SG&A. The diluted EPS guidance for 2025 has been lowered to $3.04, reflecting anticipated market conditions and operational adjustments. Sherwin-Williams expects slight deflation in raw material costs in the latter half of the year, although these benefits will not fully offset the impact of the softer demand environment.

Additional News

Sherwin-Williams is undergoing significant restructuring efforts aimed at achieving $105 million in cost savings amidst weak demand. Despite the challenging environment, the company successfully launched 20 new stores this quarter. Analysts offer a mixed outlook, with an average price target of $383.87, signaling a potential 12.88% upside. GuruFocus places the stock's GF Value at $313.05, indicating a 7.95% downside risk. These achievements are overshadowed by the downward revision of full-year sales and earnings forecasts, attributed to persistent sluggish sales and ongoing supply chain disruptions.