Earnings from Wabtec and Sherwin-Williams

We have three Buy List earnings reports scheduled for today. Wabtec (WAB) and Sherwin-Williams (SHW) were this morning, and Carriage Services (CSV) will be after the close.

Wabtec reported Q1 earnings of 92 cents per share. That was a two-cent beat.

The best news is that Wabtec reaffirmed their full-year guidance. They expect revenue of $4.1 billion and earnings of “about” $3.80 per share, excluding restructuring costs.

The CEO said:

Our first-quarter results exceeded our expectations slightly and represent a solid start to the year. With a record backlog and the positive indicators we’re seeing in our core markets, we are well positioned to meet our financial targets in 2018. Our transit business delivered improved margins in the quarter and maintained a record backlog. In freight, we are seeing a meaningful pick-up in the aftermarket. We continue to make progress on the integration of Faiveley Transport and remain ahead of our synergy targets. As we focus on short-term performance, we are investing in our long-term growth strategies and are confident we can deliver improved earnings, margins and cash flow in the future.

The shares are up about 3.4% this morning, and they touched a nine-month high. It’s now an open secret on Wall Street that GE is looking to sell their transportation business to WAB. Expect more details soon.

The earnings report from Sherwin-Williams is a bit complicated. The company had Q1 earnings of $3.57 per share, but there are some accounting issues related to the Valspar acquisition.

The $3.57 figure includes 24 cents per share in transaction costs and 71 cents per share in “accounting impact” costs. On the plus side, Valspar added $1.08 per share in net income. The net debt charge from Valspar was 40 cents per share.

For earnings, the $3.57 per share is the number to go with, and that beat Wall Street’s consensus of $3.16 per share. That’s good news and the CEO said he expects Sherwin to increase core net sales by “mid-to-high single digits” compared with last year.

Sherwin now expects 2018 earnings of $14.95 to $15.45 per share, but that includes $3.40 to $3.50 per share related to Valspar. So without that, Sherwin see full-year EPS of $18.35 to $18.95. But this new figure includes 40 cents per share “related to an expanded customer agreement primarily impacting Valspar operations.” Wall Street had been expecting $19.14 per share.

So they beat earnings but lowered full-year guidance by 40 cents per share. The shares are currently off by about 3%.

Posted by on April 24th, 2018 at 11:13 am


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