Sherwin-Williams Company (SHW) AI Stock Analysis

• Market Cap: $83.52B
• Dividend Yield: 0.88%
• Average Volume (3M): 2.12M
• Price to Earnings (P/E): 31.5
• Beta (1Y): 0.96
• Revenue Growth: 0.20%
• EPS Growth: 14.31%
• Country: US
• Employees: 63,890
• Sector: Basic Materials
• Sector Strength: 57
• Industry: Chemicals - Specialty
• EPS (TTM): 10.55
• Shares Outstanding: 251,510,150
• 10 Day Avg. Volume: 1,918,123
• 30 Day Avg. Volume: 2,117,491
• PEG Ratio: 2.20
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.64
• Price to Cash Flow (P/CF): 22.50
• P/FCF Ratio: 21.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $392.93
• Price Target Upside: 21.72% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 17

Sherwin-Williams displays strong financial performance with impressive revenue and profit growth, though offset by a high debt-to-equity ratio and declining cash flow. The technical analysis shows a balanced market position without strong momentum. Valuation metrics suggest the stock may be trading at a premium, though the earnings call indicates positive future growth and strategic initiatives. Overall, the company's solid performance and strategic outlook contribute to a moderately positive stock score, but careful attention to financial leverage and market conditions is advised.

Positive Factors

Market Position

SHW's acquisition of BASF's Brazilian decorative coatings business gives SHW a leading position in a growing market.

Sales Growth

January Paint & Wallpaper sales were up 4.7% year-over-year, indicating strong performance despite challenging weather conditions.

Strategic 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

Consumer Confidence

Deteriorating consumer confidence, visible in the February data, is associated with a much more fragile housing market.

Interest Rates

Stubborn interest rates remain the largest risk for Sherwin-Williams, potentially affecting future performance.

Valuation Concerns

Sherwin-Williams' valuations now appear quite extended compared to quality peers, suggesting potential downside.

Sherwin-Williams Company Business Overview & Revenue Model

Company Description

The Sherwin-Williams Company develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers. It operates through three segments: The Americas Group, Consumer Brands Group, and Performance Coatings Group. The Americas Group segment offers architectural paints and coatings, and protective and marine products, as well as OEM product finishes and related products for architectural and industrial paint contractors, and do-it-yourself homeowners. The Consumer Brands Group segment supplies a portfolio of branded and private-label architectural paints, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks, and adhesives to retailers and distributors. The Performance Coatings Group segment develops and sells industrial coatings for wood finishing and general industrial applications, automotive refinish products, protective and marine coatings, coil coatings, packaging coatings, and performance-based resins and colorants. It serves retailers, dealers, jobbers, licensees, and other third-party distributors through its branches and direct sales staff, as well as through outside sales representatives. The company has operations primarily in the North and South America, the Caribbean, Europe, Asia, and Australia. As of February 17, 2022, it operated approximately 5,000 company-operated stores and facilities. The Sherwin-Williams Company was founded in 1866 and is headquartered in Cleveland, Ohio.

How the Company Makes Money

Sherwin-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 exhibits strong revenue growth and profitability, with improvements in gross and net profit margins. Despite this, the high debt-to-equity ratio and declining free cash flow are areas of concern, indicating potential risks associated with leverage and cash management. The overall financial health is solid, but attention to debt management and cash flow generation is crucial for sustained performance.

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.

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.

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.

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
-1.20B	-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

• Technical Analysis Sentiment: Negative
• Last Price: 322.81
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHW, the sentiment is Negative. The current price of 322.81 is below the 20-day moving average (MA) of 341.62, below the 50-day MA of 351.10, and below the 200-day MA of 354.20, indicating a bearish trend. The MACD of -2.14 indicates Negative momentum. The RSI at 53.42 is Neutral, neither overbought nor oversold. The STOCH value of 81.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SHW.

Sherwin-Williams Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AXTA	78 Outperform	$6.49B	16.66	21.49%	―	1.77%	47.48%
RPM	77 Outperform	$13.91B	21.37	25.61%	1.79%	0.12%	24.30%
EMN	75 Outperform	$8.72B	9.84	16.11%	4.34%	1.91%	2.94%
SHW	68 Neutral	$83.52B	31.47	69.05%	0.88%	0.20%	14.31%
DD	65 Neutral	$24.75B	35.38	3.12%	2.62%	2.64%	80.37%
PPG	65 Neutral	$22.50B	16.62	19.13%	2.71%	-4.59%	11.09%
Sector *	47 Neutral	$2.35B	-2.91	-21.55%	3.59%	4.17%	-28.20%

Sherwin-Williams Company Corporate Events

Sherwin-Williams Announces Leadership Transition for Growth

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.