Sherwin-Williams Q3 2026 Earnings: Sales Rise as Margins Narrow

Sherwin-Williams (NYSE: SHW) reported Q3 2026 net sales of $6.86 billion, up 7.9% year over year, while diluted EPS increased 0.9% to $3.38 from $3.35. Sales benefited from pricing, the Suvinil acquisition, and growth across all three reportable segments. However, higher raw-material and supply-chain costs and a less favorable business mix reduced margins, while net income declined 1.5%.

Core Financial Results

Consolidated sales growth reflected higher revenue across all reportable segments, including the contribution from Suvinil, which Sherwin-Williams acquired in October 2025. Selling price increases added a mid-single-digit percentage to sales, while Paint Stores and Performance Coatings also recorded low-single-digit volume growth.

Gross profit increased by approximately 4.9%, slower than revenue, as cost and mix pressures reduced gross margin by 140 basis points. SG&A declined as a percentage of sales, but higher interest expense and acquisition-related costs limited earnings growth.

The quarterly comparison is shown below; dollar figures are in millions except per-share data.

Adjusted diluted EPS excluded $0.21 per share of Valspar acquisition-related amortization and $0.04 per share of severance and restructuring costs. The comparable exclusions in Q3 2025 were $0.20 and $0.04 per share, respectively.

Business and Segment Performance

All three segments increased sales, but their profit trends differed. Paint Stores and Performance Coatings generated higher segment profit, while Consumer Brands reported lower profit despite the largest sales increase.

Paint Stores Group sales were supported by mid-single-digit pricing and low-single-digit volume growth. All professional end markets grew, led by double-digit growth in protective and marine coatings, high-single-digit growth in commercial, and mid-single-digit growth in residential repaint. Profit grew more slowly than sales because of higher input and supply-chain costs and spending on additional sales representatives and stores. Same-store sales increased 3.9%.

Consumer Brands Group’s 21.7% sales growth primarily reflected the Suvinil acquisition, favorable currency translation, and a positive mix shift, partly offset by soft North American demand. Segment profit declined because of raw-material and supply-chain costs, incremental Suvinil-related SG&A, and unfavorable currency transaction effects. Adjusted segment margin fell to 18.3% from 23.3%.

Performance Coatings Group benefited from mid-single-digit pricing and low-single-digit volume growth. General Industrial, Packaging, and Coil each recorded double-digit sales growth, while Industrial Wood and Automotive Refinish grew at low-single-digit rates. Higher costs limited reported margin to 13.4%, down from 13.7%.

Profitability, Cash Flow, and Balance Sheet

Higher raw-material and supply-chain costs were the main pressure on profitability. Mix also weighed on gross margin because of Suvinil’s dilutive effect and faster growth in lower-margin segments. SG&A provided a partial offset, falling to 30.2% of sales from 30.7%, even though the absolute expense increased to $2.07 billion.

Interest expense rose to $139.3 million from $117.2 million. Sherwin-Williams attributed part of the increase in administrative costs to additional interest expense associated with higher debt. At September 30, short-term borrowings, the current portion of long-term debt, and long-term debt totaled approximately $11.80 billion, compared with approximately $11.52 billion a year earlier.

For the first nine months of 2026—not the third quarter alone—the company generated $2.59 billion in operating cash flow. It returned $2.98 billion through dividends and share repurchases during the same period, including repurchases of 7.1 million shares. Third-quarter shareholder returns totaled $749.0 million.

Cash and equivalents stood at $264.2 million at quarter-end. Accounts receivable increased to $3.60 billion from $3.12 billion a year earlier, while inventories rose to $2.55 billion from $2.28 billion.

Lower Share Count Kept EPS Positive Despite Lower Net Income

The quarter produced a notable divergence between total earnings and per-share earnings. Net income declined 1.5%, but diluted EPS rose 0.9% because weighted-average diluted shares fell to 242.8 million from 249.0 million, a reduction of approximately 2.5%.

The lower share count more than offset the decline in net income on a per-share basis. Adjusted EPS followed a similar pattern, increasing 1.1% even though adjusted EBITDA grew more slowly than revenue and its margin narrowed.

2026 Guidance

Sherwin-Williams maintained its full-year sales outlook, revised its GAAP diluted EPS range, and narrowed adjusted EPS guidance. The release did not provide the previous numerical EPS ranges, so the exact size and direction of the GAAP revision cannot be quantified from the supplied information.

The latest company outlook is summarized below.

The GAAP EPS range includes $0.82 per share of Valspar acquisition-related amortization and $0.11 per share of severance and restructuring expenses incurred through September 30, 2026. Adjusted EPS excludes those items.

Management’s View

Chair, President, and CEO Heidi G. Petz described underlying market volumes as muted but said the company continued to gain customers and increase its share of customer spending. Management is using pricing and cost actions to address inflation while continuing investments intended to support sales growth.

Looking ahead, management said customer sentiment and leading indicators point to muted demand through the remainder of 2026 and into 2027. Its stated priorities are market-share gains, customer service, inflation offsets, cost reductions, and profitable growth.

Risks Investors Need to Watch

• Demand could remain subdued: Management expects muted demand into 2027, while Consumer Brands is already experiencing soft conditions in North America. Prolonged weakness could make growth more dependent on pricing and acquisitions.
• Input costs may continue to pressure margins: Higher raw-material and supply-chain costs reduced profitability across the company’s major segments. Further inflation could limit the benefit of sales growth unless pricing and cost actions offset it.
• Suvinil is adding sales but diluting profitability: The acquisition supported Consumer Brands growth but also introduced incremental SG&A and an unfavorable gross-margin mix. The segment’s reported profit declined even as sales rose sharply.
• Higher debt is increasing interest expense: Interest expense rose nearly 19% year over year in the quarter. Additional financing costs could continue to constrain the conversion of operating growth into net income.

Summary

Sherwin-Williams delivered broad Q3 2026 sales growth through pricing, modest volume gains in key segments, and the Suvinil acquisition. That growth did not fully reach the bottom line because higher input costs, acquisition-related expenses, mix, and interest expense compressed margins, although a lower share count supported EPS growth. The main issues to monitor are whether pricing and cost reductions can stabilize margins, whether Consumer Brands profitability improves, and how muted demand affects the company’s maintained sales outlook.