SHERWIN-WILLIAMS CO/THE (SHW) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:SHW - US8243481061 - Common Stock
348.33 USD
-0.19 (-0.05%)
348.33 USD
0 (0%)
Taking everything into account, SHW scores 6 out of 10 in our fundamental rating. SHW was compared to 83 industry peers in the Chemicals industry. SHW has an excellent profitability rating, but there are some minor concerns on its financial health. SHW is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
- SHW had positive earnings in the past year.
- In the past year SHW had a positive cash flow from operations.
- SHW had positive earnings in each of the past 5 years.
- SHW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- SHW has a better Return On Assets (9.81%) than 95.18% of its industry peers.
- SHW has a better Return On Equity (58.12%) than 100.00% of its industry peers.
- The Return On Invested Capital of SHW (13.81%) is better than 92.77% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for SHW is significantly above the industry average of 6.11%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.81% | ||
| ROE | 58.12% | ||
| ROIC | 13.81% |
ROA(3y)10.23%
ROA(5y)9.93%
ROE(3y)65.2%
ROE(5y)65.66%
ROIC(3y)15.49%
ROIC(5y)14.7%
1.3 Margins
- SHW's Profit Margin of 11.05% is amongst the best of the industry. SHW outperforms 87.95% of its industry peers.
- SHW's Profit Margin has improved in the last couple of years.
- SHW has a Operating Margin of 15.81%. This is in the better half of the industry: SHW outperforms 78.31% of its industry peers.
- In the last couple of years the Operating Margin of SHW has grown nicely.
- The Gross Margin of SHW (48.88%) is better than 93.98% of its industry peers.
- In the last couple of years the Gross Margin of SHW has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.81% | ||
| PM (TTM) | 11.05% | ||
| GM | 48.88% |
OM growth 3Y6.82%
OM growth 5Y3.75%
PM growth 3Y7.49%
PM growth 5Y6.16%
GM growth 3Y4.21%
GM growth 5Y1.54%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so SHW is still creating some value.
- Compared to 1 year ago, SHW has less shares outstanding
- The number of shares outstanding for SHW has been reduced compared to 5 years ago.
- SHW has a better debt/assets ratio than last year.
2.2 Solvency
- SHW has an Altman-Z score of 4.14. This indicates that SHW is financially healthy and has little risk of bankruptcy at the moment.
- Looking at the Altman-Z score, with a value of 4.14, SHW belongs to the top of the industry, outperforming 87.95% of the companies in the same industry.
- SHW has a debt to FCF ratio of 4.75. This is a neutral value as SHW would need 4.75 years to pay back of all of its debts.
- With an excellent Debt to FCF ratio value of 4.75, SHW belongs to the best of the industry, outperforming 80.72% of the companies in the same industry.
- A Debt/Equity ratio of 2.52 is on the high side and indicates that SHW has dependencies on debt financing.
- SHW has a worse Debt to Equity ratio (2.52) than 84.34% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.52 | ||
| Debt/FCF | 4.75 | ||
| Altman-Z | 4.14 |
ROIC/WACC0.95
WACC14.53%
2.3 Liquidity
- A Current Ratio of 0.82 indicates that SHW may have some problems paying its short term obligations.
- The Current ratio of SHW (0.82) is worse than 95.18% of its industry peers.
- SHW has a Quick Ratio of 0.82. This is a bad value and indicates that SHW is not financially healthy enough and could expect problems in meeting its short term obligations.
- With a Quick ratio value of 0.52, SHW is not doing good in the industry: 92.77% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.82 | ||
| Quick Ratio | 0.52 |
3. Growth
3.1 Past
- SHW shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.35%.
- Measured over the past years, SHW shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.02% on average per year.
- Looking at the last year, SHW shows a small growth in Revenue. The Revenue has grown by 0.96% in the last year.
- SHW shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 5.23% yearly.
EPS 1Y (TTM)2.35%
EPS 3Y11.65%
EPS 5Y10.02%
EPS Q2Q%6.53%
Revenue 1Y (TTM)0.96%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%3.18%
3.2 Future
- Based on estimates for the next years, SHW will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.04% on average per year.
- The Revenue is expected to grow by 3.89% on average over the next years.
EPS Next Y1.38%
EPS Next 2Y5.28%
EPS Next 3Y7.56%
EPS Next 5Y8.04%
Revenue Next Year1.7%
Revenue Next 2Y3.22%
Revenue Next 3Y3.65%
Revenue Next 5Y3.89%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- A Price/Earnings ratio of 30.80 indicates a quite expensive valuation of SHW.
- SHW's Price/Earnings ratio is in line with the industry average.
- Compared to an average S&P500 Price/Earnings ratio of 27.25, SHW is valued at the same level.
- Based on the Price/Forward Earnings ratio of 27.74, the valuation of SHW can be described as expensive.
- SHW's Price/Forward Earnings is on the same level as the industry average.
- When comparing the Price/Forward Earnings ratio of SHW to the average of the S&P500 Index (25.98), we can say SHW is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.8 | ||
| Fwd PE | 27.74 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, SHW is valued a bit more expensive than 78.31% of the companies in the same industry.
- The rest of the industry has a similar Price/Free Cash Flow ratio as SHW.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 35.59 | ||
| EV/EBITDA | 22.11 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- SHW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)22.38
PEG (5Y)3.07
EPS Next 2Y5.28%
EPS Next 3Y7.56%
5. Dividend
5.1 Amount
- SHW has a yearly dividend return of 0.90%, which is pretty low.
- SHW's Dividend Yield is comparable with the industry average which is at 2.23.
- Compared to an average S&P500 Dividend Yield of 1.82, SHW's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.9% |
5.2 History
- On average, the dividend of SHW grows each year by 13.53%, which is quite nice.
- SHW has paid a dividend for at least 10 years, which is a reliable track record.
- SHW has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)13.53%
Div Incr Years21
Div Non Decr Years21
5.3 Sustainability
- 30.09% of the earnings are spent on dividend by SHW. This is a low number and sustainable payout ratio.
- SHW's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP30.09%
EPS Next 2Y5.28%
EPS Next 3Y7.56%
SHERWIN-WILLIAMS CO/THE / SHW FAQ
Can you provide the ChartMill fundamental rating for SHERWIN-WILLIAMS CO/THE?
ChartMill assigns a fundamental rating of 6 / 10 to SHW.
What is the valuation status of SHERWIN-WILLIAMS CO/THE (SHW) stock?
ChartMill assigns a valuation rating of 2 / 10 to SHERWIN-WILLIAMS CO/THE (SHW). This can be considered as Overvalued.
Can you provide the profitability details for SHERWIN-WILLIAMS CO/THE?
SHERWIN-WILLIAMS CO/THE (SHW) has a profitability rating of 9 / 10.
What is the earnings growth outlook for SHERWIN-WILLIAMS CO/THE?
The Earnings per Share (EPS) of SHERWIN-WILLIAMS CO/THE (SHW) is expected to grow by 1.38% in the next year.
Can you provide the dividend sustainability for SHW stock?
The dividend rating of SHERWIN-WILLIAMS CO/THE (SHW) is 5 / 10 and the dividend payout ratio is 30.09%.