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Sherwin-Williams (SHW)
:SHW
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Sherwin-Williams Company
(NYSE:SHW)71Outperform
Positive Factors
Acquisition
The acquisition of BASF's Brazilian architectural paints business is expected to enhance SHW's regional scale and offer growth opportunities in Latin America.
Negative Factors
Earnings Growth
Higher interest costs and moving expenses are significant headwinds affecting earnings growth.
Valuation
A mixed response from investors is expected, as valuation appears full even after synergies.
Sherwin-Williams Company (SHW) vs. S&P 500 (SPY)
Market Cap
$90.51B
Dividend Yield0.79%
Average Volume (3M)1.90M
Price to Earnings (P/E)34.1
Beta (1Y)1.17
Revenue Growth0.20%
EPS Growth14.31%
CountryUS
Employees63,890
SectorBasic Materials
Sector Strength56
IndustryChemicals
Share Statistics
EPS (TTM)10.55
Shares Outstanding251,364,140
10 Day Avg. Volume2,340,410
30 Day Avg. Volume1,897,478
Financial Highlights & Ratios
PEG Ratio2.38
Price to Book (P/B)N/A
Price to Sales (P/S)3.92
Price to Cash Flow (P/CF)24.20
P/FCF Ratio23.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$401.13Price Target Upside10.32% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Sherwin-Williams Company Business Overview & Revenue Model
Company DescriptionSherwin-Williams Company (SHW) is a global leader in the manufacture, development, distribution, and sale of paints, coatings, and related products to professional, industrial, commercial, and retail customers. Founded in 1866 and headquartered in Cleveland, Ohio, Sherwin-Williams operates through three segments: The Americas Group, Consumer Brands Group, and Performance Coatings Group. The company offers a wide range of products including interior and exterior paints, primers, stains, and varnishes, serving markets that span from home improvement and construction to automotive and aerospace industries.
How the Company Makes MoneySherwin-Williams generates revenue through the sale of its diverse range of paint and coating products. The Americas Group, the largest segment, primarily sells architectural paints and coatings through company-operated stores in the U.S., Canada, and Latin America. The Consumer Brands Group markets branded and private-label products primarily through retailers, including home centers, mass merchandisers, and independent paint dealers. The Performance Coatings Group provides a broad range of industrial coatings and finishing solutions to OEMs, refinishers, and other commercial sectors globally. Key revenue streams include direct sales through its extensive network of stores and online platforms, licensing agreements, and strategic partnerships with retailers and distributors. The company also benefits from its strong brand recognition and innovation in product development to maintain competitive advantage and market presence.
Sherwin-Williams Company Financial Statement Overview
Summary
Sherwin-Williams shows strong revenue growth and profitability. However, the high debt-to-equity ratio and declining free cash flow raise concerns about leverage and cash management.Income Statement
Sherwin-Williams has demonstrated consistent revenue growth over the years, with revenue increasing from $17.9B in 2019 to $23.1B in 2024. The company maintains a strong gross profit margin of 48.5% in 2024, indicating efficient cost management. The net profit margin improved to 11.6% in 2024 from 8.6% in 2019, reflecting increased profitability. However, the EBIT margin has slightly decreased from 13.5% in 2023 to 13.2% in 2024, suggesting marginal pressure on operational efficiency.82
Very Positive
Balance Sheet
The company's debt-to-equity ratio stood at 2.94 in 2024, indicating high leverage which poses a potential risk. However, the return on equity (ROE) improved significantly to 66.2% in 2024, highlighting strong returns for shareholders. The equity ratio remains relatively low at 17.1% in 2024, suggesting a heavy reliance on debt financing, which may impact financial stability.75
Positive
Cash Flow
Sherwin-Williams' free cash flow has shown fluctuation, with a decline from $3.1B in 2020 to $0 in 2024, raising concerns about cash generation capacity. The operating cash flow to net income ratio is not calculable for 2024, which limits the assessment of cash conversion efficiency. The lack of available data for 2024 restricts a comprehensive cash flow analysis.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 23.10B | 23.05B | 22.15B | 19.94B | 18.36B | Gross Profit |
| 11.20B | 10.76B | 9.33B | 8.54B | 8.68B | EBIT |
| 3.77B | 3.52B | 2.98B | 2.58B | 2.86B | EBITDA |
| 3.77B | 4.15B | 3.97B | 3.57B | 3.87B | Net Income Common Stockholders |
| 2.68B | 2.39B | 2.02B | 1.86B | 2.03B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 210.40M | 276.80M | 198.80M | 165.70M | 226.60M | Total Assets |
| 23.63B | 22.95B | 22.59B | 20.67B | 20.40B | Total Debt |
| 11.91B | 11.81B | 12.51B | 11.50B | 10.11B | Net Debt |
| 11.70B | 11.53B | 12.31B | 11.33B | 9.89B | Total Liabilities |
| 19.58B | 19.24B | 19.49B | 18.23B | 16.79B | Stockholders Equity |
| 4.05B | 3.72B | 3.10B | 2.44B | 3.61B |
| Cash Flow | Free Cash Flow | |||
| 2.08B | 2.63B | 1.28B | 1.87B | 3.10B | Operating Cash Flow |
| 3.15B | 3.52B | 1.92B | 2.24B | 3.41B | Investing Cash Flow |
| -1.15B | -1.04B | -1.61B | -476.40M | -322.40M | Financing Cash Flow |
| -2.02B | -2.42B | -282.40M | -1.83B | -3.02B |
Sherwin-Williams Company Technical Analysis
Positive
363.62
Price Trends
351.82
Positive
363.61
Positive
349.76
Positive
Market Momentum
1.32
Negative
56.81
Neutral
86.21
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHW, the sentiment is Positive. The current price of 363.62 is above the 20-day moving average (MA) of 355.73, above the 50-day MA of 351.82, and above the 200-day MA of 349.76, indicating a bullish trend. The MACD of 1.32 indicates Negative momentum. The RSI at 56.81 is Neutral, neither overbought nor oversold. The STOCH value of 86.21 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SHW.
Sherwin-Williams Company Risk Analysis
Sherwin-Williams Company disclosed 22 risk factors in its most recent earnings report. Sherwin-Williams Company reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sherwin-Williams Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $7.73B | 19.66 | 21.49% | ― | 1.77% | 47.48% | |
76 Outperform | $16.00B | 24.57 | 25.61% | 1.56% | 0.12% | 24.30% | |
71 Outperform | $90.51B | 34.12 | 69.05% | 0.79% | 0.20% | 14.31% | |
65 Neutral | $26.18B | 19.34 | 19.13% | 2.33% | -4.59% | 11.09% | |
62 Neutral | $2.41B | 6.78 | 17.67% | ― | 32.42% | -56.26% | |
60 Neutral | $3.10B | 24.84 | 7.27% | 1.56% | 1.65% | -10.99% | |
47 Neutral | $2.64B | -4.00 | -31.55% | 3.33% | 2.93% | -29.90% |
* Basic Materials Sector Average
Performance Comparison
SHW
Sherwin-Williams Company
363.62
26.04
7.71%
FUL
H.B. Fuller Company
57.05
-21.28
-27.17%
PPG
PPG Industries
115.48
-23.95
-17.18%
RPM
RPM International
122.55
6.86
5.93%
AXTA
Axalta Coating Systems
34.93
1.64
4.93%
VAL
Valaris
37.39
-31.98
-46.10%
Sherwin-Williams Company Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 1.11% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
Sherwin-Williams experienced a strong year in 2024 with record earnings growth and significant cash generation, alongside strategic expansions and shareholder returns. However, the company faces a challenging demand environment, particularly in consumer brands and industrial segments, with expected cost pressures from raw materials and interest expenses in 2025.Highlights
Record Earnings Growth
Adjusted earnings per share grew by a near double-digit percentage, reaching $11.33 per share for fiscal year 2024.
Strong Cash Generation
Sherwin-Williams generated $3.2 billion in cash, which was 13.7% of sales.
Shareholder Returns
Returned $2.5 billion to shareholders through share repurchases and dividends in 2024.
Margin Expansion
Adjusted margins expanded year-over-year in all three operating segments.
New Store Expansion
Plans to open 80 to 100 new stores in the U.S. and Canada in 2025.
Dividend Increase
A proposed annual dividend increase of 10.5% to $3.16 per share, marking the 47th consecutive year of dividend increases.
Packaging Segment Recovery
Packaging returned to growth by winning new accounts and recapturing lost share.
Lowlights
Challenging Demand Environment
The demand environment remained choppy throughout 2024, with expectations of continued softness into 2025.
Consumer Brands Group Decline
Consumer brands group sales decreased due to unfavorable FX and soft DIY demand.
Industrial Segment Pressure
General Industrial, the largest division, faced pressure due to softness in heavy equipment demand.
Raw Material Cost Increases
Expectations for raw materials to rise by a low single-digit percentage in 2025, with tariffs impacting costs.
Higher Interest Expenses
Interest expenses are expected to rise due to refinancing debt at higher rates.
Environmental and Non-operating Costs
An increase of approximately $75 million in non-operating costs due to environmental provisions and lack of asset sale gains.
Company Guidance
During Sherwin-Williams' call reviewing the Fourth Quarter and Full Year 2024 results, the company outlined its guidance for 2025, expecting consolidated sales to increase by a low single-digit percentage. The diluted net income per share is projected to be between $10.70 and $11.10, excluding certain expenses, with adjusted diluted net income per share expected to range from $11.65 to $12.05, reflecting a mid-single-digit percentage increase from 2024's adjusted earnings of $11.33 per share. The company plans to open 80 to 100 new stores in the U.S. and Canada, invest in its new headquarters and R&D center, and implement targeted price increases. It anticipates raw material costs to rise by a low single-digit percentage and expects to maintain a net debt-to-adjusted EBITDA ratio of 2x to 2.5x. Despite a challenging demand environment, Sherwin-Williams remains focused on gaining market share and delivering shareholder value.Sherwin-Williams Company Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Sherwin-Williams Announces Leadership Transition for Growth
Positive
Nov 14, 2024
Sherwin-Williams is undergoing a leadership transition as Executive Chairman John G. Morikis announces his retirement effective December 31, 2024, after a remarkable 40-year tenure. Heidi G. Petz, the current President and CEO, will take on the additional role of Chair of the Board starting January 1, 2025, marking a new chapter for the company. This strategic shift aims to unify leadership and drive future growth, leveraging Petz’s extensive experience within Sherwin-Williams.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.