Sherwin-Williams' (NYSE:SHW) Guidance Appears Suspect

Sherwin-Williams (NYSE:SHW) no doubt had a good fourth quarter, but Ticonderoga said they were perplexed by the guidance given by Sherwin for 2011.

Ticonderoga says, "Very Solid Quarter on Virtually All Metrics; Easily Beat Us and Consensus on Both Revenues and EPS. Strong segment results bodes well moving forward. Guidance mixed with strong revenue forecasts offset by modest EPS guidance. Key to conference call will be whether raw materials are truly causing that much pain or management is sandbagging given that there is little reason to be heroic in an uncertain environment.

"Guidance Is What Is Perplexing. Great Revenue growth but modest EPS growth. Sandbagging or RM Headwinds? Revenues guided up mid-to-high teens in 1Q 2011, high-single-digit for all of 2011. We have 3.8% and 3.2%, respectively. EPS guidance is $0.48-$0.58 in 1Q, $4.65-$5.05 for full year 2011. We are at $0.57 in 1Q, while consensus is $0.47, but that has a $0.33 outlier (low 50s excluding). Our $4.92 for the full year is in the middle of range, while consensus is $5.07. Again, though, we were using much lower revenue estimates."

Ticonderoga reiterates a 'Neutral' rating on Sherwin-Williams (SHW), which closed Tuesday at $86.09, gaining $2.79, or 3.35 percent.