Sherwin-Williams Earnings: Pricing Power Drives Margin Expansion Despite Moderating Volumes

Wide-moat-rated Sherwin-Williams reported strong second-quarter results due to higher selling prices and robust architectural paint demand. Selling prices increased across all three segments and raw material costs continued to moderate, with both providing a strong boost to operating margins. While near-term headwinds in architectural paint remain, we expect potential volume pressures will largely be offset by favorable pricing and moderating raw materials costs. As such, we've increased our fair value estimate to $211 from $201 per share due to increased near-term revenue and profitability in our forecast.