Key Highlights

  • Adjusted diluted EPS was $3.63 against $3.59, up 1.1%, below the $3.69 estimate as screened.
  • Net sales rose 7.9% to $6,860.0 million, and Paint Stores Group same-store sales rose 3.9%.
  • Gross margin fell to 47.8% from 49.2%, while SG&A improved to 30.2% of sales from 30.7%.
  • 2026 adjusted EPS guidance was narrowed to $11.85 to $12.15 from $11.80 to $12.20.
  • Shares were quoted about 5.4% lower in pre-market trading on Tuesday, October 27, versus the prior close.

Sherwin-Williams Earnings: Why Did Shares Fall About 5% Pre-Market on October 27?

Sherwin-Williams (NYSE:SHW) reported third-quarter results before the open on Tuesday, October 27, with adjusted diluted EPS of $3.63, up 1.1% from $3.59 and below the $3.69 estimate as screened. Diluted EPS was $3.38 against $3.35. Net sales rose 7.9% to $6,860.0 million, against analyst estimates of about $6.78 billion.

Shares were quoted at $317.69 in pre-market trading on October 27, about 5.4% below the October 26 close of $335.79. The company narrowed its 2026 outlook and said customer sentiment points to muted demand for the rest of the year and into 2027.

Sherwin-Williams Margins: Where Did the Gross Margin Squeeze Come From?

Gross margin was 47.8% against 49.2%, pressured by higher raw material and supply chain costs and by mix, including dilution from Suvinil. SG&A was $2,069.1 million, or 30.2% of sales against 30.7%, reflecting efficiency efforts. Net income was $821.0 million, down 1.5%, and adjusted EBITDA rose 3.3% to $1,403.4 million, a 20.5% margin.

Management described the quarter as showing resilience despite a challenging demand environment and said it remains highly confident in delivering through current conditions.

Sherwin-Williams Segments: Is Consumer Brands the Margin Drag?

Paint Stores Group net sales rose 4.7% to $4,015.8 million, with same-store sales up 3.9%. Segment profit rose 2.1% to $974.3 million, and the margin eased to 24.3% from 24.9%.

Consumer Brands Group net sales rose 21.7% to $937.4 million, but adjusted segment profit fell 4.4% to $171.4 million, and the adjusted margin dropped to 18.3% from 23.3%. Performance Coatings Group net sales rose 8.8% to $1,903.3 million, with adjusted segment profit up 4.7% to $308.7 million and an adjusted margin of 16.2% against 16.9%.

Sherwin-Williams Cash Returns and Outlook: How Wide Is the Narrowed Range?

For 2026, diluted EPS is guided to $10.92 to $11.22 against $10.26 in 2025, and adjusted diluted EPS to $11.85 to $12.15 against $11.43. The adjusted range was $11.80 to $12.20 after the second quarter, so the midpoint is unchanged at $12.00 (calculated). The GAAP range includes $0.82 per share of Valspar acquisition amortization and $0.11 per share of severance and restructuring.

Management expects fourth-quarter net sales up mid-single digits and full-year net sales up mid- to high-single digits, with an effective tax rate in the low twenties.

Operating cash flow was $2.59 billion for nine months, and capital expenditures were $128.7 million in the quarter against $196.4 million. The company returned $749.0 million in the quarter, including $194.3 million of dividends, and $2.98 billion over nine months, including repurchases of 7.1 million shares. Remaining authorisation is 22.5 million shares, and total debt was about $11.8 billion.

Investors will watch fourth-quarter sales against the mid-single-digit guide, whether pricing offsets raw material costs, and how Consumer Brands margins respond as Suvinil dilution and demand trends develop into 2027.