Sherwin-Williams Q2 2025 Earnings Preview: Key Financial Expectations and Market Context#
The Sherwin-Williams Company (SHW is set to release its Q2 2025 earnings on July 22, 2025, amid a complex backdrop of housing market challenges and strategic expansion initiatives. The stock trades near $338, down slightly by -0.56% intraday, with a market capitalization of approximately $84.7 billion. Analysts forecast a modest revenue increase to about $6.3 billion for the quarter, representing a year-over-year growth of roughly +0.2%, while earnings per share (EPS) are expected to rise by +1.6% to +5.5% to around $3.75 to $3.76. This cautious optimism reflects Sherwin-Williams' capacity to maintain resilience despite macroeconomic pressures, including fluctuating demand in residential construction and renovation sectors.
Professional Market Analysis Platform
Unlock institutional-grade data with a free Monexa workspace. Upgrade whenever you need the full AI and DCF toolkit—your 7-day Pro trial starts after checkout.
Segment Performance Outlook: Strength in Paint Stores Amid Consumer and Coatings Challenges#
Sherwin-Williams' Q2 2025 segment outlook reveals a nuanced performance landscape. The Paint Stores division, responsible for the bulk of the company's revenue, is projected to generate net sales of approximately $3.68 billion, marking a healthy increase of +1.6% year-over-year. Corresponding segment profit is expected to improve to around $946.7 million from $907.1 million, underscoring steady demand within both residential and commercial painting markets. This segment's growth is critical as it anchors Sherwin-Williams' core business and reflects the company's extensive retail footprint of over 4,800 stores.
Monexa for Analysts
Go deeper on SHW
Open the SHW command center with real-time data, filings, and AI analysis. Upgrade inside Monexa to trigger your 7-day Pro trial whenever you’re ready.
Conversely, the Consumer Brands segment faces headwinds, with net sales anticipated to decline slightly to about $826.14 million and segment profit easing to $213.9 million from $220.4 million. The Performance Coatings segment also shows contraction, with expected net sales down by -1.7% to $1.77 billion and segment profit decreasing to approximately $337.39 million. These challenges likely stem from supply chain adjustments and the housing market slowdown, particularly impacting industrial and specialty coatings demand.
Housing Market Dynamics and Pricing Strategies#
The housing market continues to exert a significant influence on Sherwin-Williams' revenue trajectory. Rising mortgage rates and affordability constraints have dampened new residential construction and remodeling activities, key drivers for Sherwin-Williams' product demand. Despite these headwinds, the company has actively employed pricing strategies to mitigate margin pressures caused by inflation and raw material cost increases. Targeted price hikes have helped preserve gross margins, which improved to 48.47% in fiscal 2024 from 46.67% the prior year, signaling effective cost management amid challenging input costs.
Sherwin-Williams’ wide store network enables agile regional pricing adaptations, helping to counterbalance localized market variations. The company's operating margin improved to 16.33% in 2024, up from 15.26% in 2023, reflecting disciplined expense control and operational efficiencies. However, the current ratio remains below 1.0 at 0.77x, indicating tighter short-term liquidity, which investors should monitor in the context of ongoing capital expenditures and debt servicing.
Strategic Expansion: Early Integration of Suvinil Acquisition#
A pivotal strategic development for Sherwin-Williams is the ongoing integration of Suvinil, a leading Latin American paint brand. This acquisition extends Sherwin-Williams' presence in emerging markets, diversifying its geographic revenue streams and enhancing its product portfolio. Early integration efforts have reportedly progressed well, contributing to increased market penetration in South America.
While short-term financial impacts include integration costs and adjustments to regional market dynamics, the acquisition aligns with Sherwin-Williams' long-term growth strategy. The company’s goodwill and intangible assets remain substantial at $11.11 billion as of the end of 2024, reflecting the premium paid for strategic acquisitions including Suvinil. Over time, the acquisition is expected to bolster revenue growth and profitability, offsetting slower growth in mature markets.
Financial Health and Capital Allocation#
Sherwin-Williams maintains a robust financial position with total assets of $23.63 billion and total liabilities of $19.58 billion as of December 2024. The company’s net debt stands at approximately $11.7 billion, with a debt-to-equity ratio around 3.1x, reflecting a leveraged but manageable capital structure. Free cash flow declined by -20.9% in the latest fiscal year to $2.08 billion, influenced by higher capital expenditures ($1.07 billion) and acquisition-related outflows.
The company continues to prioritize shareholder returns through dividends and share repurchases. Dividends paid in 2024 totaled $723.4 million, with a payout ratio of 27.66%, maintaining dividend sustainability supported by steady cash flows. Share repurchases amounted to $1.74 billion, demonstrating management’s commitment to capital discipline and enhancing shareholder value.
Valuation and Analyst Sentiment#
Sherwin-Williams trades at a trailing P/E of approximately 31.95x, with forward P/E estimates showing a declining trajectory from 31.6x in 2024 to an expected 19.86x by 2028, indicating anticipated earnings growth and valuation normalization. The enterprise value to EBITDA ratio stands at 21.77x, higher than the broader industry average, reflecting market confidence in Sherwin-Williams' market position and growth prospects.
Analyst consensus remains largely positive, with many recommending an outperform stance. The average price target is around $280, suggesting a current market premium possibly due to the company’s strong brand and strategic initiatives like the Suvinil acquisition. EPS forecasts indicate a compound annual growth rate (CAGR) of about +10.4% through 2028, supporting a narrative of sustained profitability expansion.
Historical Performance and Strategic Execution#
Sherwin-Williams has demonstrated consistent revenue growth, with a three-year CAGR of +5.02%, and net income growth at +12.88%. Operating margins have expanded from 12.95% in 2021 to 16.33% in 2024, highlighting effective operational management. Return on equity (ROE) is exceptionally high at 66.63%, driven by strong profitability and leverage, though investors should weigh the associated financial risk.
Management's track record in translating strategic acquisitions into financial gains is evident from prior integrations, such as the Valspar acquisition in 2017, which delivered significant scale and market share growth. The current capital allocation strategy balances investment in growth (capital expenditures and acquisitions) with shareholder returns, aligning with stated strategic priorities.
What This Means For Investors#
Sherwin-Williams' upcoming Q2 2025 earnings release will be a critical indicator of how effectively the company is navigating a challenging housing market while leveraging strategic acquisitions for growth. Investors should focus on segment-level performance, especially the resilience of the Paint Stores division and the impact of Consumer Brands and Performance Coatings headwinds.
The successful integration of Suvinil and disciplined capital allocation underpin Sherwin-Williams' medium to long-term growth prospects. However, liquidity metrics and free cash flow trends warrant close monitoring to assess financial flexibility amid ongoing investment and debt obligations.
Given the valuation profile and analyst sentiment, Sherwin-Williams presents a blend of stability and growth potential. Its dominant market position, strategic geographic expansion, and strong operational metrics position the company to withstand sector cyclicality and capitalize on emerging opportunities.
Key Financial Metrics Table#
| Metric | 2024 Actual | 2023 Actual | % Change YoY |
|---|---|---|---|
| Revenue | $23.1B | $23.05B | +0.22% |
| Gross Profit | $11.2B | $10.76B | +4.11% |
| Operating Income | $3.77B | $3.52B | +7.10% |
| Net Income | $2.68B | $2.39B | +12.25% |
| Operating Margin | 16.33% | 15.26% | +1.07pp |
| Gross Margin | 48.47% | 46.67% | +1.80pp |
| Free Cash Flow | $2.08B | $2.63B | -20.9% |
| Dividend per Share | $3.01 | $3.01 | 0% |
Forward Estimates Summary Table#
| Year | Revenue Estimate | EPS Estimate | Forward P/E | EV/EBITDA Estimate |
|---|---|---|---|---|
| 2025 | $23.43B | $11.91 | 27.99x | 22.55x |
| 2026 | $24.58B | $13.33 | 24.88x | 21.50x |
| 2027 | $25.84B | $15.00 | 21.79x | 20.44x |
| 2028 | $26.85B | $16.78 | 19.86x | 19.68x |
Key Takeaways#
- Sherwin-Williams is expected to report modest Q2 2025 revenue growth amid housing market headwinds.
- The Paint Stores segment remains the primary growth driver, while Consumer Brands and Performance Coatings face pressure.
- Strategic acquisition of Suvinil enhances geographic diversification and long-term growth potential.
- Operating margins and gross margins improved in 2024, demonstrating effective cost management.
- Free cash flow declined due to increased capital expenditures and integration costs, impacting short-term liquidity.
- Strong analyst sentiment and forward earnings growth forecasts support valuation despite current market volatility.