Sherwin-Williams grew Q2 2026 sales 7.5% to $6.79B and diluted EPS 14.3% to $3.43 on price increases, the Suvinil acquisition and buybacks, while raw material inflation edged gross margin down and management raised full-year guidance but expects demand to stay soft.
Revenue
$6.8B
+7.5% YoY
Net income
$844M
+11.8% YoY
Diluted EPS
$3.43
+14.3% YoY
Operating margin
18.1%
Headline: price and share gains beat a flat market, and fewer shares lift EPS 14%
Sherwin-Williams, the largest US paint and coatings company, grew second-quarter 2026 net sales 7.5% to $6.79 billion and diluted EPS 14.3% to $3.43, even though CEO Heidi Petz described "no meaningful improvement in demand." Three things did the work: price increases (a mid-single-digit boost in the company's own paint stores), the October 2025 acquisition of Suvinil, a Brazilian paint brand that added about 16 points of growth to the consumer segment, and fewer shares outstanding after buybacks. The quarter also shows the weak spot: rising raw material costs pushed the gross margin down slightly, and management expects demand to stay soft through the second half of the year.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$6,789.3M
$6,314.5M
+7.5%
Gross margin
49.2%
49.4%
-0.2 pts
SG&A as % of sales
31.0%
31.9%
-0.9 pts
Operating margin (our calculation*)
18.1%
17.4%
+0.7 pts
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*Sherwin-Williams does not report an "operating income" line. Operating margin here is gross profit minus SG&A and other general expense ($1,230.9M vs. $1,100.4M), divided by net sales. It measures how much of each sales dollar is left after running the business, before interest and taxes.
Source for all figures: the Q2 2026 Form 10-Q (Statements of Consolidated Income and MD&A) and the Q2 earnings release filed the same day.
Where the growth came from, segment by segment
Segment
Net sales
YoY
Segment profit
Margin (vs. Q2 2025)
Paint Stores Group
$3,890.0M
+5.1%
$957.6M (+4.5%)
24.6% (24.8%)
Consumer Brands Group
$983.5M
+21.5%
$212.9M (+29.7%)
21.6% (20.3%)
Performance Coatings Group
$1,913.8M
+6.3%
$273.3M (+11.5%)
14.3% (13.6%)
Administrative
$2.0M
n/m
-$331.3M
n/m
Paint Stores Group is the company-owned store network selling mostly to professional painters and contractors. It is more than half of sales and about two-thirds of segment profit. Sales rose 5.1%, which the 10-Q attributes "primarily due to selling price increases, which impacted Net sales by a mid-single digit percentage, as well as low-single digit percentage sales volume growth." In plain terms, most of the growth came from charging more per gallon, and a smaller part from selling more gallons. Same-store sales (sales at stores open more than a year, which removes the effect of new stores) rose 4.2%, up from just 0.8% a year earlier. By customer type, protective and marine coatings (bridges, tanks, ships) grew by a double-digit percentage, commercial by a high single digit, and residential repaint (repainting existing homes) by a mid single digit.
Profit growth (+4.5%) still lagged sales growth (+5.1%), so the segment margin slipped 20 basis points (0.2 percentage points) to 24.6%. The 10-Q gives two reasons: "a moderate rise in raw material costs" and "investments in additional sales reps and stores." Segment SG&A rose $63.3M, against a $106.8M rise in gross profit.
Consumer Brands Group (branded paint sold through retailers and distributors, including Latin American operations) grew 21.5%, but this figure needs unpacking. The 10-Q attributes 16.0 points to the Suvinil acquisition and 1.6 points to favorable currency translation (foreign sales converted into more dollars). That leaves roughly 4 points of organic growth, which is our subtraction and which the 10-Q attributes to "increased Net sales in North America." Adjusted segment margin, which excludes Valspar deal amortization and restructuring costs, rose from 22.4% to 24.5%. The release credits "favorable mix, supply chain efficiencies and benefits from foreign currency transaction gains." Restructuring charges in this segment rose to $12.9M from $1.7M.
Performance Coatings Group (industrial coatings for cars, packaging such as can linings, wood, coil steel and general manufacturing) grew 6.3%. Price and mix contributed a low-single-digit percentage, volume another low single digit, and currency 2.0 points. All businesses grew: General Industrial and Automotive Refinish by high single digits, and Packaging, Industrial Wood and Coil by mid single digits. Segment margin improved from 13.6% to 14.3%, and profit rose 11.5%, nearly twice the sales growth.
The margin story: raw materials versus pricing
Consolidated gross margin (the share of sales left after the direct cost of making the product) fell to 49.2% from 49.4%. Cost of goods sold rose 8.0%, faster than sales, which the 10-Q attributes to "higher Net sales, inclusive of the Suvinil acquisition, a moderate rise in raw material costs and an unfavorable foreign currency related impact." The 10-Q says the margin decline was "primarily due to the dilutive impact of the Suvinil acquisition," meaning Suvinil earns a lower gross margin than the rest of the company. The CEO was more direct about input costs in the release: "We also implemented pricing actions to offset raw material inflation that pressured our gross margin in the quarter."
Overhead did the offsetting. SG&A rose $92.1M, but more slowly than sales, so it fell 90 basis points as a share of sales. Part of that is a comparison effect: the Administrative function's SG&A fell $23.5M "primarily due to lower employee costs related to non-recurring severance from the prior period."
Below the operating line: more debt, fewer shares
Interest expense rose 20.9% to $135.9M "due to an increase in short-term borrowings and long-term debt as well as interest expense related to real estate financing associated with the new global headquarters." Total debt was $12.07B at June 30, 2026, up from $10.69B a year earlier. Short-term borrowings reached $2.25B, compared with $1.71B.
Other (income) expense swung to $12.1M of income from $4.7M of expense, driven by lower currency losses and investment gains. This one-off-type line added about $17M to pre-tax profit compared with last year.
The effective tax rate rose to 24.2% from 23.4%, because of a smaller tax benefit from employee stock compensation.
Buybacks cut the diluted share count 2.1% to 246.0M. That explains why EPS (+14.3%) grew faster than net income (+11.8%). In the first half the company repurchased 5.6M shares and returned $2.23B to shareholders through dividends and buybacks. Net operating cash for the half was $1.487B.
GAAP vs. adjusted EPS. GAAP EPS grew faster (+14.3%) than adjusted EPS (+9.5%). Adjusted EPS strips out Valspar acquisition amortization ($0.20 in both years) and severance/restructuring costs, which were $0.07 this year against $0.18 in Q2 2025. Because last year's quarter carried heavier restructuring charges, the GAAP comparison looks better. The ~9.5% adjusted figure is the cleaner measure of underlying progress.
Takeaway: Sherwin-Williams is growing mainly by raising prices and taking market share in a market that is not growing. Paint Stores volume grew only by a low single digit, raw material inflation already squeezed gross margin, and management has announced an 8% Paint Stores price increase effective September 1. The second half therefore depends on customers accepting those price increases without cutting how much they buy.
Balance sheet watch
Net working capital (current assets minus current liabilities) was a deficit of $2.63B, compared with $1.77B a year earlier, and the current ratio fell to 0.73. This mainly reflects heavier short-term borrowing and a larger current portion of long-term debt. Liquidity is adequate, with $293.5M of cash and $1.97B of unused credit capacity. Still, the company is funding buybacks partly with debt while interest costs rise, which leaves it less room if demand weakens further.
Outlook: guidance raised, but the second half implies a slowdown
Management raised full-year 2026 guidance:
Guidance item
Q3 2026
Full year 2026
FY2025 actual
Net sales
Up mid to high-single digit %
Up mid to high-single digit %
—
Diluted EPS (GAAP)
—
$10.92 – $11.32
$10.26
Adjusted diluted EPS
—
$11.80 – $12.20
$11.43
The outlook language is cautious. The 10-Q says "the softer-for-longer demand environment is expected to continue in the second half of 2026, coupled with inflation in raw materials, energy, logistics and packaging." The CEO added that "customer sentiment and the leading indicators we track point to continued demand softness in the second half." On housing, the six-month numbers show new residential construction sales in Paint Stores down by a low-single-digit percentage ("as expected"), while residential repaint grew by a mid single digit. The filing does not break out DIY (do-it-yourself retail) demand separately. It only notes higher North American sales in Consumer Brands. Restructuring actions taken in Q2 are expected to save about $17M a year.
Our read: the raised range implies a slower second half. First-half adjusted EPS was $6.05 (vs. $5.62 a year earlier, +7.7%). The full-year guide of $11.80–$12.20 therefore implies second-half adjusted EPS of about $5.75–$6.15, compared with roughly $5.81 in H2 2025 (our subtraction: $11.43 minus $5.62). That is a range from about -1% to +6%, well below the first half's +7.7%. Second-half results will also lose some support: Suvinil stops adding acquisition growth after its October anniversary, interest expense keeps running above last year, and raw material inflation continues. The 8% September price increase is the main lever. The Q3 report (likely late October, based on the usual reporting cadence) should show whether Paint Stores volume held up after the increase, and whether gross margin recovered toward or above last year's 49.4%.