Sherwin-Williams Company (SHW) AI Stock Analysis

• Market Cap: $82.59B
• Dividend Yield: 0.91%
• Average Volume (3M): 1.82M
• Price to Earnings (P/E): 32.8
• Beta (1Y): 0.80
• Revenue Growth: 0.31%
• EPS Growth: 2.66%
• Country: US
• Employees: 63,890
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): 3.38
• Shares Outstanding: 249,333,310
• 10 Day Avg. Volume: 2,118,336
• 30 Day Avg. Volume: 1,824,192
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.21
• Enterprise Value/Revenue: 4.32
• Enterprise Value/Gross Profit: 8.83
• Enterprise Value/Ebitda: 22.97
• 1Y Price Target: $387.50
• Price Target Upside: 14.50% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11

• Rating: 70 Neutral
• Price Target: $388.00 ▲(14.64% Upside)

Sherwin-Williams' strong financial performance and robust cash flow generation are significant strengths, providing a solid foundation despite high leverage. The technical analysis suggests a neutral trend with potential oversold conditions. Valuation metrics indicate possible overvaluation, and the earnings call revealed challenges in demand and supply chain inefficiencies, leading to reduced earnings guidance. These factors collectively result in a moderate overall stock score.

Positive Factors

Strong Cash Flow Generation

The company's ability to generate strong cash flow supports its financial stability and provides a buffer against economic uncertainties, ensuring it can fund operations and invest in growth initiatives.

Gross Margin Expansion

Consistent gross margin expansion indicates effective pricing strategies and cost management, enhancing profitability and providing a competitive edge in the market.

Market Share Gains

Gaining market share in key segments like residential repainting strengthens Sherwin-Williams' competitive position, supporting long-term revenue growth and brand dominance.

Negative Factors

High Leverage

High leverage poses financial risks, potentially limiting the company's ability to invest in growth or weather economic downturns, impacting long-term financial health.

Supply Chain Inefficiencies

Supply chain inefficiencies can disrupt operations and increase costs, affecting profitability and operational efficiency over the long term if not addressed.

Decreased Sales in Key Segments

Decreased sales in key segments like Consumer Brands can hinder overall growth and market competitiveness, necessitating strategic adjustments to regain momentum.

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 multiple key streams. The Paint Stores Group, which accounts for a significant portion of the company's sales, includes over 4,800 retail locations that sell a variety of paint and coatings products directly to consumers and contractors. The Consumer Brands Group provides products to mass merchandisers and home improvement stores, further diversifying their retail presence. Additionally, the Global Coatings Group serves international markets, supplying industrial and protective coatings, which cater to sectors like automotive, aerospace, and construction. The company benefits from strategic partnerships with major retailers, allowing for broader distribution of its products. Moreover, Sherwin-Williams invests in innovation and product development to enhance its offerings, contributing to revenue growth. Overall, the combination of direct retail sales, partnerships, and diverse product lines plays a crucial role in the company's earnings.

Sherwin-Williams Company Financial Statement Overview

Summary

Sherwin-Williams showcases strong profitability and cash flow generation, with a stable revenue growth and healthy margins. Despite high leverage, robust cash flow provides a buffer against financial uncertainties. High debt levels are a concern but mitigated by solid cash management.

Income Statement

Sherwin-Williams demonstrates strong profitability, with a gross profit margin of approximately 48.9% and a net profit margin of around 11% in TTM. Revenue has shown stable growth over the years, with a slight uptick in EBIT and EBITDA margins, indicating efficient operations. However, net income slightly decreased in the TTM compared to the previous year, which could be a concern if the trend continues.

Balance Sheet

The balance sheet reflects high leverage with a debt-to-equity ratio of about 2.9 in TTM, indicating considerable financial risk. However, the company has improved its equity base over the years, enhancing its equity ratio slightly. The return on equity stands strong at approximately 57.8%, showcasing effective equity utilization, though the high debt levels remain a potential risk.

Cash Flow

Sherwin-Williams exhibits robust cash flow generation, with a strong operating cash flow to net income ratio of 1.20 and a healthy free cash flow growth rate. The free cash flow to net income ratio is 0.85, indicating effective cash management despite high capital expenditures. Consistent positive cash flow trends provide a buffer against potential financial uncertainties.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	23.08B	23.10B	23.05B	22.15B	19.94B	18.36B
Gross Profit	11.28B	11.20B	10.76B	9.33B	8.54B	8.68B
EBITDA	4.34B	4.49B	4.15B	3.54B	3.16B	3.44B
Net Income	2.54B	2.68B	2.39B	2.02B	1.86B	2.03B
Balance Sheet
Total Assets	25.36B	23.63B	22.95B	22.59B	20.67B	20.40B
Cash, Cash Equivalents and Short-Term Investments	269.80M	210.40M	276.80M	198.80M	165.70M	226.60M
Total Debt	12.77B	11.91B	11.81B	12.51B	11.50B	10.11B
Total Liabilities	20.96B	19.58B	19.24B	19.49B	18.23B	16.79B
Stockholders Equity	4.40B	4.05B	3.72B	3.10B	2.44B	3.61B
Cash Flow
Free Cash Flow	2.15B	2.08B	2.63B	1.28B	1.87B	3.10B
Operating Cash Flow	3.06B	3.15B	3.52B	1.92B	2.24B	3.41B
Investing Cash Flow	-1.17B	-1.20B	-1.04B	-1.61B	-476.40M	-322.40M
Financing Cash Flow	-1.83B	-2.02B	-2.42B	-282.40M	-1.83B	-3.02B

Sherwin-Williams Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 338.44
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 338.44 is above the 20-day moving average (MA) of 337.31, below the 50-day MA of 351.65, and below the 200-day MA of 347.98, indicating a bearish trend. The MACD of -4.79 indicates Negative momentum. The RSI at 41.67 is Neutral, neither overbought nor oversold. The STOCH value of 50.67 is Neutral, 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
ECL	78 Outperform	$79.46B	37.47	24.26%	0.94%	0.57%	25.50%
AXTA	74 Outperform	$6.18B	14.26	22.09%	―	-1.01%	50.58%
SHW	70 Neutral	$82.59B	32.84	62.43%	0.91%	0.31%	2.66%
RPM	69 Neutral	$14.36B	20.91	24.05%	1.83%	3.09%	12.25%
DD	65 Neutral	$33.90B	―	0.31%	1.98%	4.55%	-130.25%
PPG	63 Neutral	$23.06B	18.12	16.88%	2.63%	-10.59%	-7.79%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%