Earnings from Alliance Data and Sherwin-Williams

We had two more earnings report this morning.

Alliance Data Systems (ADS) had a very strong fourth quarter. Revenue rose by 15% to $2.11 billion, and core EPS rose 34% to $6.26 per share. The recent tax reform law boosted Q4 by $1.02 per share. Even adjusting for that, Alliance’s results were well above Wall Street’s consensus of $5 per share.

The company also raised its full-year guidance for 2018. Earlier, ADS said to expect full-year earnings of $21.50 per share. Now they say core EPS should range between $22.50 and $23 per share. ADS also boosted its quarterly dividend by 10% to 57 cents per share.

The stock is down about 4% which may be due to lower revenue guidance. I’m not sure what the market is thinking but I’m impressed by these results.

The numbers for Sherwin-Williams (SHW) are a little complicated due to the recent acquisition of Valspar. Not including that, Sherwin’s sales were up 6.9% last quarter. Adjusting for several items, the company made $2.95 per share for Q4. That was below Wall Street’s consensus of $3.12 per share.

Commenting on the financial results, John G. Morikis, Chairman, President and Chief Executive Officer, said “2017 was a year of record sales, net income, earnings per share, cash and EBITDA, but it will best be remembered as the year in which we joined forces with Valspar. The enormous amount of effort and energy invested over the past seven months in bringing these two great companies together, strengthening our customer relationships, defining the right organizational structure and building momentum in every line of business is transforming Sherwin-Williams into a faster growing, financially stronger and more profitable enterprise. These efforts will continue throughout 2018 with similar effect.

I’m not too concerned by the earnings miss since the company is still adjusting to the big merger. For 2018, Sherwin-Williams expects earnings in the range of $16.05 to $16.45 per share. The shares are down about 0.5% in Thursday’s trading.

Posted by on January 25th, 2018 at 12:18 pm


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