On Thursday, paint and coatings provider Sherwin-Williams (NYSE:SHW) released fiscal third-quarter 2006 earnings for the period ended Sept. 30. Here are the quick-and-dirty details for the quarter.

  • Sales grew 7.1% to $2.1 billion for the quarter. The company attributed growth to strong paint sales and same-store sales that advanced 7.2% at its paint stores, apparently bucking the slowdown in new housing construction and overall malaise in the housing market as mortgage rates have risen.
  • Net profit growth was even stronger, at 18.1%, and earnings per share increased 21.5% as the company continues to buy back its stock. Sherwin's net margin also grew an impressive 79 basis points to 8.5%, as operating profitability improved.
  • For the fourth quarter, management expects net sales growth of 5%-7% from the same period last year and earnings in the range of $0.63-$0.68, up from $0.54 last year. For the entire year, it's projecting sales expansion of 8%-9% and diluted earnings of $4.10-$4.15, which includes $0.08 for stock compensation expenses.
  • Based on the current stock price of $57.53, that's a forward P/E of about 14, which at face value is low -- but keep in mind that Sherwin-Williams has some litigation risk due to lead-paint legal battles. There have been no major adverse rulings to date, but current litigation in the state of Rhode Island is something to keep a close eye on.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$2,120

$2,117

$1,977

7.1%

Net Profit

--

$179

$152

18.1%

EPS

$1.27

$1.30

$1.07

21.5%

Diluted Shares

138

141

(2.1%)

*13 weeks ended Sept. 30, 2006 and 2005

Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

44.21%

42.48%

1.73

Operating Margin

13.55%

12.00

1.55

Net Margin

8.46%

7.67%

0.79

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$400

$30

1243.6%

Accounts Rec.

$1,015

$956

6.2%

Inventory

$855

$822

4.1%


Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$855

$722

18.4%

Long-Term Debt

$299

$487

(38.7%)



Learn the ways of the balance sheet.

Cash Flow Highlights
Sherwin didn't include cash flow information in its press release; we'll be able to check out the 10-Q for the numbers when it's filed.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.