Sherwin-Williams Earnings: Demand Remains Mixed but Direct Tariff Impact Appears Minimal

Wide-moat Sherwin-Williams reported first-quarter results that were largely in line with our expectations. Net sales declined 1% year over year, as growth in the paint stores group was offset by weakness in the consumer brands and performance coatings groups. The paint stores group continues to impress as demand for Sherwin's paint products in residential and commercial end markets drives growth. While the threat of tariffs and a slowdown in GDP growth remain a concern for Sherwin, the company's direct exposure to tariffs is limited as it produces most paints and coatings in the regions where they are sold. As such, we've increased our fair value estimate to $258 from $247 per share.