$SHW · SHERWIN WILLIAMS CO
Sherwin-Williams reported Q3 2026 results with consolidated net sales of $6.86B (+7.9% YoY), GAAP diluted EPS of $3.38 (+0.9% YoY), and adjusted diluted EPS of $3.63 (+1.1% YoY). Gross margin contracted 140bps to 47.8% as raw material and supply chain costs rose. The company narrowed full-year 2026 adjusted EPS guidance to $11.85–$12.15 and guided Q4 sales up mid-single digits, while warning of muted demand extending into 2027.
- Consolidated net sales rose 7.9% YoY to $6.86B, driven by price increases and the Suvinil acquisition.
- Gross margin contracted to 47.8% from 49.2% YoY, pressured by higher raw material and supply chain costs.
- Diluted GAAP EPS of $3.38 barely grew (+0.9% YoY) despite the 7.9% revenue increase.
- Full-year 2026 adjusted EPS guidance narrowed to $11.85–$12.15, implying Q4 adjusted EPS of roughly $2.90–$3.20.
- Consumer Brands Group segment margin collapsed to 15.6% from 20.4%, with adjusted margin down 500bps to 18.3%.
Extended-hours trading shows SHW at $318.10, down 5.09% from the $335.16 regular close. The selloff reflects disappointment that 7.9% revenue growth translated to only 0.9% EPS growth, with gross margin compression and weak Consumer Brands profitability raising concerns about the quality of earnings.
A 7.9% revenue beat translating to near-flat EPS growth signals serious margin erosion at the core of Sherwin-Williams' business, with the Consumer Brands segment in particular showing alarming profitability deterioration.
Sherwin-Williams' margin compression mirrors broader coatings-industry headwinds from raw material inflation. The 500bps adjusted margin decline in Consumer Brands stands out as particularly severe versus peers, suggesting Suvinil integration challenges or North America demand weakness beyond sector norms.
CEO Petz flagged "muted demand over the remainder of the year and into 2027," with raw material and supply chain cost inflation continuing to pressure margins. The Suvinil acquisition is diluting gross margins, and CBG segment profitability is deteriorating sharply.