Q2 Earnings Roundup: Sherwin-Williams (NYSE:SHW) And The Rest Of The Building Materials Segment

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at building materials stocks, starting with Sherwin-Williams (NYSE:SHW).

Traditionally, building materials companies have built competitive advantages with economies of scale, brand recognition, and strong relationships with builders and contractors. More recently, advances to address labor availability and job site productivity have spurred innovation. Additionally, companies in the space that can produce more energy-efficient materials have opportunities to take share. However, these companies are at the whim of construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of building materials companies.

The 8 building materials stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 2.9% above.

Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.

Luckily, building materials stocks have performed well with share prices up 13.5% on average since the latest earnings results.

Sherwin-Williams (NYSE:SHW)

Widely known for its success in the paint industry, Sherwin-Williams (NYSE:SHW) is a manufacturer of paints, coatings, and related products.

Sherwin-Williams reported revenues of $6.27 billion, flat year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with an impressive beat of analysts’ operating margin estimates but a miss of analysts’ organic revenue estimates.

"Led by strong performance in the Paint Stores Group, we continued to execute on our proven strategy across the Company to deliver consolidated sales within our expectations, gross margin expansion, EBITDA growth, and a 12.5% percent increase in adjusted diluted net income per share," said President and Chief Executive Officer, Heidi G. Petz.

Sherwin-Williams delivered the weakest performance against analyst estimates of the whole group. Interestingly, the stock is up 15.8% since reporting and currently trades at $373.51.

Is now the time to buy Sherwin-Williams? Access our full analysis of the earnings results here, it’s free.

Best Q2: UFP (NASDAQ:UFPI)

Beginning as a lumber supplier in the 1950s, UFP (NASDAQ:UFPI) makes a wide range of building materials for the construction, retail, and industrial sectors

UFP reported revenues of $1.90 billion, down 6.9% year on year, outperforming analysts’ expectations by 1.6%. The business had a very strong quarter with an impressive beat of analysts’ volume estimates and a decent beat of analysts’ operating margin estimates.

The market seems content with the results as the stock is up 2% since reporting. It currently trades at $129.58.

Is now the time to buy UFP? Access our full analysis of the earnings results here, it’s free.

Slowest Q2: Tecnoglass (NYSE:TGLS)

The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE:TGLS) is a manufacturer of architectural glass, windows, and aluminum products.

Tecnoglass reported revenues of $219.7 million, down 2.5% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted full-year revenue guidance beating analysts’ expectations but a miss of analysts’ operating margin estimates.

Interestingly, the stock is up 47.8% since the results and currently trades at $70.26.

Read our full analysis of Tecnoglass’s results here.

AZEK (NYSE:AZEK)

With a significant portion of its products made from recycled materials, AZEK (NYSE:AZEK) designs and manufactures goods for outdoor living spaces.

AZEK reported revenues of $434.4 million, up 12.1% year on year. This number topped analysts’ expectations by 9.5%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ organic revenue estimates.

AZEK scored the biggest analyst estimates beat but had the weakest full-year guidance update among its peers. The stock is up 25.2% since reporting and currently trades at $46.10.

Read our full, actionable report on AZEK here, it’s free.

Resideo (NYSE:REZI)

Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.

Resideo reported revenues of $1.59 billion, flat year on year. This number topped analysts’ expectations by 3.6%. It was a strong quarter as it also put up revenue guidance for next quarter exceeding analysts’ expectations and a decent beat of analysts’ ADI Global Distribution revenue estimates.

Resideo achieved the highest full-year guidance raise among its peers. The stock is flat since reporting and currently trades at $19.30.

Read our full, actionable report on Resideo here, it’s free.

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