Sherwin-Williams Company (SHW) AI Stock Analysis

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Sherwin-Williams Company

(NYSE:SHW)

Rating:72Outperform

Price Target:

$390.00

▲(10.94%Upside)

Sherwin-Williams demonstrates strong financial performance with consistent profitability and effective cash flow management, which significantly supports its stock score. Technical analysis shows a stable price trend, though valuation metrics suggest the stock might be overvalued, which could limit upside potential. The earnings call highlighted both strategic strengths and challenges, contributing positively to the score. Overall, while there are risks due to valuation and market challenges, the company's financial robustness and strategic initiatives provide a solid foundation.

Positive Factors

Market Leverage

SHW has strong leverage to an eventual decline in interest rates or housing recovery with its volumes potentially growing 2-3 times the market.

Sales Growth

Strong pricing should keep sales growth in the black despite weaker US housing-related demand.

Valuation Justification

The company's consistent share gains, new account wins, and focus on self-help measures justify the higher valuation multiple.

Negative Factors

Comparison Challenges

Sherwin-Williams faced a more challenging comparison in the second quarter compared to Paint & Wallpaper sales.

Earnings Estimates

SHW's 2025 earnings estimates are lowered due to further weakness in the housing and industrial markets.

Interest Rate Headwinds

Stubborn interest rates remain a headwind for the company.

Sherwin-Williams Company (SHW) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$86.71B

Dividend Yield0.91%

Average Volume (3M)1.51M

Price to Earnings (P/E)32.7

Beta (1Y)0.86

Revenue Growth0.26%

EPS Growth12.82%

CountryUS

Employees63,890

SectorBasic Materials

Sector Strength73

IndustryChemicals - Specialty

Share Statistics

EPS (TTM)2.25

Shares Outstanding250,600,590

10 Day Avg. Volume1,478,300

30 Day Avg. Volume1,513,483

Financial Highlights & Ratios

PEG Ratio165.88

Price to Book (P/B)20.14

Price to Sales (P/S)0.00

P/FCF Ratio38.42

Enterprise Value/Market Cap1.11

Enterprise Value/Revenue1.04

Enterprise Value/Gross Profit8.57

Enterprise Value/Ebitda5.45

Forecast

1Y Price Target

$388.73

Price Target Upside10.58% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering13

Sherwin-Williams Company Business Overview & Revenue Model

Company DescriptionSherwin-Williams Company (SHW) is a leading global producer of paints and coatings. Headquartered in Cleveland, Ohio, the company operates in the paint and coatings industry, serving both professional and retail customers. Sherwin-Williams offers a wide range of products, including architectural paints, industrial coatings, and protective finishes. With a strong presence in North America, the company also operates in various international markets, supporting its growth and market reach.

How the Company Makes MoneySherwin-Williams makes money primarily through the sale of paints and coatings products. The company's revenue model is driven by its three reportable segments: The Americas Group, Consumer Brands Group, and Performance Coatings Group. The Americas Group generates revenue by selling directly to professional contractors and DIY customers through a network of over 4,000 company-operated stores. The Consumer Brands Group sells products under well-known brands to retailers and distributors, including home centers, independent paint dealers, and hardware stores. The Performance Coatings Group provides advanced coating solutions for industrial applications, serving sectors such as automotive, aerospace, and construction. Strategic partnerships with major retailers and a focus on innovation and quality contribute significantly to Sherwin-Williams' earnings.

Sherwin-Williams Company Key Performance Indicators (KPIs)

Any

Net Profit by Segment

Net Profit by Segment
Reveals the profitability of each business segment, highlighting which areas are driving earnings and which might need strategic adjustments.

Chart InsightsSherwin-Williams' Paint Stores Group continues to drive profit growth, reflecting strong demand and strategic pricing. However, the Consumer Brands Group faces challenges from weak DIY demand and unfavorable FX, despite improved margins. The Performance Coatings Group is under pressure due to declining sales and external cost challenges. The recent earnings call highlights the company's strategic focus on acquisitions, like Suvinil, to bolster growth in Latin America, while acknowledging ongoing demand challenges that may persist into 2026. Investors should monitor the impact of tariffs and raw material costs on future profitability.

Data provided by:

Main Street Data

Sherwin-Williams Company Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: 6.05%|

Next Earnings Date:Jul 22, 2025

Earnings Call Sentiment Neutral

Sherwin-Williams delivered solid first-quarter results with growth in specific segments and strategic acquisitions. However, the company faced challenges in other segments and external pressures from tariffs. The overall sentiment is balanced, reflecting both achievements and significant challenges.

Q1-2025 Updates

Positive Updates

Solid First Quarter Results

Adjusted earnings per share grew by 3.7% to $2.25. Gross margin and gross profit dollars expanded, and EBITDA margin and dollars also increased. SG&A decreased due to continued good spending control.

Growth in Paint Stores Group

Sales grew by a low single-digits percentage with price mix up by mid-single-digits. Protective and Marine grew by a high single-digits percentage driven by oil and gas, water and wastewater, and infrastructure projects.

Dividend Increase and Share Repurchases

Sherwin-Williams invested $352 million in share repurchases and increased its dividend by 10%.

Suvinil Acquisition

Announced acquisition of Suvinil, a market leader in Brazil, expected to close in the second half of the year. The acquisition is expected to complement the existing Latin America business.

Negative Updates

Softness in Consumer Brands Group

Sales decreased due to unfavorable FX and soft DIY demand in North America. Despite lower sales, adjusted segment margin expanded due to supply chain efficiencies.

Challenges in Performance Coatings Group

Sales were below expectations with FX, price mix, and volume all decreasing by low single-digits percentages. General Industrial and Auto Refinish remained under pressure.

Weak Commercial and Property Maintenance Sales

Sales remained under pressure given weak commercial construction completions and delayed CapEx spending.

Impact of Tariffs and Raw Material Costs

Tariffs started affecting raw material costs, particularly in areas like applicators, pigments, and packaging, leading to potential cost increases.

Company Guidance

During the first quarter of 2025, Sherwin-Williams reported consolidated sales within the guided range, with growth in the Paint Stores Group offset by softness in other segments. Gross margin and gross profit dollars expanded, while SG&A decreased due to effective cost control. EBITDA margin and dollars improved, with adjusted earnings per share increasing by 3.7% to $2.25. The company invested $352 million in share repurchases and increased its dividend by 10%. Looking ahead, Sherwin-Williams expects demand challenges to persist in 2025, with some markets potentially not gaining momentum until 2026. However, the company remains confident in its strategy and ability to outperform the market. For the second quarter, Sherwin-Williams anticipates consolidated sales to be flat year-over-year and reaffirms its full-year sales and earnings per share guidance provided in January, with the potential for updated guidance in July.

Sherwin-Williams Company Financial Statement Overview

Summary

Sherwin-Williams demonstrates strong financial health with consistent profitability and effective cash flow management. Despite high leverage, the company's ability to generate substantial earnings and cash flow helps mitigate this risk. The income statement shows strong profitability with stable revenue growth, while the balance sheet's high debt-to-equity ratio is a concern.

Income Statement

Very Positive

The Sherwin-Williams Company's income statement shows strong profitability with a consistent gross profit margin of around 48% and a net profit margin near 12%. The revenue growth rate is modest but stable, indicating a solid market position. EBIT and EBITDA margins are also healthy, reflecting efficient cost management. Overall, the income statement reflects a profitable and stable financial performance.

Balance Sheet

Positive

The balance sheet indicates a high debt-to-equity ratio, suggesting significant leverage which could pose a risk if earnings fluctuate. However, the return on equity is strong at approximately 65%, showcasing efficient use of equity capital to generate profits. The equity ratio of around 17% highlights a relatively lower reliance on equity financing, typical for the industry, but warrants cautious monitoring of debt levels.

Cash Flow

Very Positive

Sherwin-Williams demonstrates strong cash flow management with a positive free cash flow and a solid operating cash flow to net income ratio above 1. The free cash flow growth rate shows some volatility, but overall cash generation remains robust, supporting ongoing business operations and potential debt servicing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	23.04B	23.10B	23.05B	22.15B	19.94B	18.36B
Gross Profit	11.22B	11.20B	10.76B	9.33B	8.54B	8.68B
EBITDA	4.47B	3.77B	4.15B	3.97B	3.57B	3.87B
Net Income	2.68B	2.68B	2.39B	2.02B	1.86B	2.03B
Balance Sheet
Total Assets	24.64B	23.63B	22.95B	22.59B	20.67B	20.40B
Cash, Cash Equivalents and Short-Term Investments	199.80M	210.40M	276.80M	198.80M	165.70M	226.60M
Total Debt	12.82B	11.91B	11.81B	12.51B	11.50B	10.11B
Total Liabilities	20.51B	19.58B	19.24B	19.49B	18.23B	16.79B
Stockholders Equity	4.13B	4.05B	3.72B	3.10B	2.44B	3.61B
Cash Flow
Free Cash Flow	2.18B	2.08B	2.63B	1.28B	1.87B	3.10B
Operating Cash Flow	3.15B	3.15B	3.52B	1.92B	2.24B	3.41B
Investing Cash Flow	-1.19B	-1.20B	-1.04B	-1.61B	-476.40M	-322.40M
Financing Cash Flow	-1.94B	-2.02B	-2.42B	-282.40M	-1.83B	-3.02B

Sherwin-Williams Company Technical Analysis

Technical Analysis Sentiment

Positive

Last Price351.54

Price Trends

50DMA

351.28

Positive

100DMA

347.08

Positive

200DMA

356.67

Negative

Market Momentum

MACD

-0.16

Negative

RSI

53.19

Neutral

STOCH

42.83

Neutral

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 351.54 is above the 20-day moving average (MA) of 345.57, above the 50-day MA of 351.28, and below the 200-day MA of 356.67, indicating a neutral trend. The MACD of -0.16 indicates Negative momentum. The RSI at 53.19 is Neutral, neither overbought nor oversold. The STOCH value of 42.83 is Neutral, 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 (43)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AXTA	76 Outperform	$6.69B	15.15	23.59%	―	0.96%	82.78%
SHW	72 Outperform	$86.71B	32.74	70.22%	0.91%	0.26%	12.82%
RPM	71 Outperform	$14.45B	22.53	25.53%	1.81%	-0.61%	15.06%
EMN	69 Neutral	$9.29B	10.24	16.16%	4.13%	2.78%	1.50%
PPG	64 Neutral	$26.21B	19.56	18.47%	2.32%	-7.67%	-0.58%
DD	63 Neutral	$31.17B	40.24	0.06%	2.20%	4.51%	-121.68%
Sector *	43 Neutral	AU$1.41B	-6.14	-40.74%	4.12%	-3.45%	-41.77%

* Basic Materials Sector Average

Performance Comparison

SHW

Sherwin-Williams Company

351.54

40.14

12.89%

EMN

Eastman Chemical

80.28

-14.56

-15.35%

PPG

PPG Industries

118.19

-8.55

-6.75%

RPM

RPM International

114.14

7.16

6.69%

AXTA

Axalta Coating Systems

30.95

-4.52

-12.74%

DuPont de Nemours

75.54

-3.56

-4.50%

Sherwin-Williams Company Corporate Events

Executive/Board ChangesShareholder Meetings

Sherwin-Williams Approves New Compensation Plan and Amendments

Neutral

Apr 21, 2025

On April 16, 2025, Sherwin-Williams held its Annual Meeting of Shareholders, where the 2025 Equity and Incentive Compensation Plan was approved, authorizing 21,969,555 shares for issuance. This plan includes various performance-based awards and limits non-employee director compensation to $750,000 annually. Additionally, shareholders approved amendments to the company’s Charter to eliminate supermajority voting requirements, reducing the required vote for certain matters to a simple majority. These changes, effective April 17, 2025, aim to streamline decision-making processes and enhance shareholder engagement.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 10, 2025