I'll research SHW before writing the preview. Let me gather recent earnings materials, guidance, news, and stock performance.Let me read the most recent earnings call transcript and release to understand guidance and trends.Let me gather stock price performance and the year-ago Q2 2025 numbers for comparison context.Let me get the year-ago Q2 2025 numbers for comparison and check recent analyst/news activity.Let me compute performance stats and check for current analyst estimates.I have what I need. Let me do one more search on the AkzoNobel/Nippon situation for context.# Sherwin-Williams (SHW) — Q2 2026 Earnings Preview
Reports Tuesday, July 28, 2026 (before open); conference call 10:00 a.m. ET
The one-line setup
SHW heads into its seasonally most important quarter with a stock that has badly lagged the market, a business that continues to out-execute a soft market, and a freshly complicated cost picture. The single most important thing to watch is not the Q2 print itself — it's whether management can hold its full-year EPS guide as raw-material inflation ramps into the back half. Management explicitly promised an updated full-year outlook with this report.
What the Street expects
- Q2 adjusted EPS consensus: ~$3.55, up roughly 5% year-over-year (vs. $3.38 adjusted / $3.00 GAAP in Q2 2025). SHW has beaten in three of the last four quarters.
- Full-year 2026 EPS: ~$11.77 consensus, near the midpoint of the company's own guide.
- Analyst posture: roughly a "Moderate Buy" across ~24 analysts (split between strong-buy and hold), with a mean price target near $372 — implying meaningful upside from the current ~$327 level.
Company guidance as it stands (set at Q1, April 28):
| Metric | Q2 2026 | Full-Year 2026 |
|---|---|---|
| Net sales | Up mid-single-digit % | Up low-to-mid-single-digit % |
| Adjusted diluted EPS | — | $11.50 – $11.90 |
| GAAP diluted EPS | — | $10.70 – $11.10 (incl. $0.80 Valspar amortization) |
| Effective tax rate | — | Low-20s % |
FY adjusted EPS midpoint ($11.70) is only ~+2.4% vs. 2025's $11.43 — a deliberately conservative bar in a "no help from the market" year.
Why the stock needs a catalyst: it has badly underperformed
- SHW is down ~3% over the past 12 months while the S&P 500 (SPY) is up ~16% — roughly 19 points of relative underperformance.
- Shares sit ~13% below their 52-week high (~$375), having bottomed near $293 in early June before a partial recovery to ~$327.
- Translation: expectations are subdued and sentiment is cautious. A credible guide reaffirmation (or better) could be a relief rally; any cut to the FY range risks a further leg down.
The five things that actually matter this quarter
1. Raw-material inflation is the swing factor for H2
This is the central tension. On the Q1 call management raised its full-year raw-material inflation outlook to up low-to-mid-single digits (from low-single digits) and warned costs would bite more materially in Q2 and the second half. Key points:
- Propylene drives ~75% of the basket; management flagged it could be up ~50% over the rest of 2026 on Middle East/Strait of Hormuz disruption. Solvents, epoxies and resins (the industrial basket) inflate first.
- Because of contractual buying (~50% of purchases) and North America sourcing (~80% of revenue), SHW insists it will see far less than the ~20% spot inflation some competitors face — a claim the Street is skeptical of and will probe hard.
- Watch for: the updated FY raw-material inflation range and gross-margin commentary. SHW has expanded gross margin in 14 of the last 15 quarters (Q1 gross margin was 49.1%); breaking that streak would be a notable negative.
2. Price vs. volume — the mix is changing even if the total holds
Management guided the same full-year EPS but a very different path: more price, less volume. Full-year price/mix was nudged to the high end of the low-single-digit range (more than double the pricing embedded in the original January guide), while volume shifted toward a low-single-digit decline. Key nuances:
- The January 1 architectural price increase is realizing better than expected, and all those conversations are done.
- Additional pricing is surgical — by customer, geography and end market — concentrated in industrial/APAC/EMEA first, Americas later.
- Management said it will go again with price if needed, potentially even mid-season (done "the right way," with customer notice). Watch for any new price action announcements and whether volume is holding up better/worse than the low-single-digit-decline framework.
3. Segment trends — PSG is the anchor; watch new residential
Prior-year Q2 2025 comparison points (Q2 is the biggest quarter seasonally):
| Segment |
Q2'25 Sales |
Q2'25 Segment Margin |
| Paint Stores Group |
$3,702M |
24.8% |
| Consumer Brands Group |
$809M |
20.3% (22.4% adj) |
| Performance Coatings Group |
$1,801M |
13.6% (16.8% adj) |
- Paint Stores Group (the crown jewel): Watch same-store sales and mix. In Q1, residential repaint returned to mid-single-digit growth, protective & marine posted its 7th straight quarter of ≥HSD growth, and commercial gained share against down-double-digit completions — but new residential remained weak and management guides PSG to low-single-digit growth for the year. Store openings on track for 80–100 net new for the year.
- Consumer Brands: Boosted by the Suvinil acquisition (Brazil, closed Oct 2025 — high-teens contribution) but Suvinil is gross-margin dilutive; North American DIY remains soft. Watch whether legacy CBG margins hold in the low-20s.
- Performance Coatings: Auto Refinish (up double digits, all regions), Packaging (benefiting from Europe's non-BPA/EFSA conversion tailwind into 2027), and General Industrial have been share-gain bright spots — but this is where industrial-cost inflation and FX hit first, muting flow-through.
4. Capital allocation & the AkzoNobel saga (now resolved)
- SHW and Nippon Paint made a joint ~€70.50/share all-cash bid for AkzoNobel in April 2026, which AkzoNobel's board rejected as not qualifying as a superior proposal; the two walked away in early June rather than pursue a binding offer. Investors welcomed the discipline — it removes a large-deal overhang and reaffirms the buyback-and-bolt-on playbook.
- Expect continued heavy shareholder returns: SHW returned $773M to shareholders in Q1 alone and ended Q1 at 2.5x net debt / adjusted EBITDA with ~28M shares left on the buyback authorization.
5. Overhangs & housekeeping
- Lead-paint reputational risk: A recent Cleveland.com investigative series revived the lead-pigment narrative; SHW is publicly rebutting it. Lead-pigment/lead-based-paint litigation remains a standing risk factor. Unlikely to move the print, but a sentiment/headline risk.
- New-building transition costs: Non-annualized costs and depreciation for the new global HQ and R&D/technology center continue to weigh on the Administrative segment and SG&A (a headwind management sized at ~100 bps of SG&A/sales).
- Investor Day: Management flagged its 2026 Financial Community Presentation on September 24 in Cleveland — the venue for any refreshed multi-year targets, so the near-term guide may be kept conservative ahead of it.
How to read the report
- Bull case reaction: FY adjusted EPS guide reaffirmed (or raised), price realization tracking ahead of raw-material inflation, gross margin still expanding, PSG same-store sales resilient. Given depressed sentiment and a ~$372 average target, this could unlock upside.
- Bear case reaction: FY guide trimmed on softer volumes and/or accelerating H2 cost inflation, gross-margin streak broken, or a weaker-than-expected new-residential/DIY read-through. With the stock already a laggard, downside gaps are possible.
- The tell: management's language on volume ("softer for longer" vs. stabilizing) and on whether pricing is fully covering the raw-material step-up into H2.
Note: Q2 2026 consensus figures and the AkzoNobel/analyst-rating details are drawn from public/press sources; all company financials, guidance and management commentary are from SHW's Q1 2026 earnings release and call (April 28, 2026) and its Q2 2025 release (July 22, 2025).