SHERWIN-WILLIAMS CO/THE (SHW) Stock Fundamental Analysis
NYSE:SHW - New York Stock Exchange, Inc. - US8243481061 - Common Stock - Currency: USD
SHW gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 85 industry peers in the Chemicals industry. SHW scores excellent on profitability, but there are some minor concerns on its financial health. SHW is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year SHW was profitable.
In the past year SHW had a positive cash flow from operations.
SHW had positive earnings in each of the past 5 years.
In the past 5 years SHW always reported a positive cash flow from operatings.
1.2 Ratios
With an excellent Return On Assets value of 10.88%, SHW belongs to the best of the industry, outperforming 96.47% of the companies in the same industry.
Looking at the Return On Equity, with a value of 64.89%, SHW belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
The Return On Invested Capital of SHW (15.78%) is better than 96.47% of its industry peers.
SHW had an Average Return On Invested Capital over the past 3 years of 15.49%. This is significantly above the industry average of 6.83%.
The 3 year average ROIC (15.49%) for SHW is below the current ROIC(15.78%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.88% | ||
| ROE | 64.89% | ||
| ROIC | 15.78% |
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
The Profit Margin of SHW (11.63%) is better than 89.41% of its industry peers.
SHW's Profit Margin has improved in the last couple of years.
SHW's Operating Margin of 16.45% is amongst the best of the industry. SHW outperforms 82.35% of its industry peers.
SHW's Operating Margin has improved in the last couple of years.
SHW has a Gross Margin of 48.72%. This is amongst the best in the industry. SHW outperforms 92.94% of its industry peers.
In the last couple of years the Gross Margin of SHW has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.45% | ||
| PM (TTM) | 11.63% | ||
| GM | 48.72% |
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
SHW has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, SHW has less shares outstanding
SHW has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, SHW has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 4.27 indicates that SHW is not in any danger for bankruptcy at the moment.
SHW has a Altman-Z score of 4.27. This is amongst the best in the industry. SHW outperforms 89.41% of its industry peers.
SHW has a debt to FCF ratio of 4.95. This is a neutral value as SHW would need 4.95 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.95, SHW is in the better half of the industry, outperforming 77.65% of the companies in the same industry.
SHW has a Debt/Equity ratio of 2.33. This is a high value indicating a heavy dependency on external financing.
SHW has a worse Debt to Equity ratio (2.33) than 84.71% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.33 | ||
| Debt/FCF | 4.95 | ||
| Altman-Z | 4.27 |
ROIC/WACC1.8
WACC8.76%
2.3 Liquidity
SHW has a Current Ratio of 0.77. This is a bad value and indicates that SHW is not financially healthy enough and could expect problems in meeting its short term obligations.
The Current ratio of SHW (0.77) is worse than 90.59% of its industry peers.
SHW has a Quick Ratio of 0.77. This is a bad value and indicates that SHW is not financially healthy enough and could expect problems in meeting its short term obligations.
SHW's Quick ratio of 0.45 is on the low side compared to the rest of the industry. SHW is outperformed by 91.76% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.77 | ||
| Quick Ratio | 0.45 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 8.98% over the past year.
SHW shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.02% yearly.
SHW shows a small growth in Revenue. In the last year, the Revenue has grown by 0.26%.
Measured over the past years, SHW shows a small growth in Revenue. The Revenue has been growing by 5.23% on average per year.
EPS 1Y (TTM)8.98%
EPS 3Y11.65%
EPS 5Y10.02%
EPS Q2Q%3.69%
Revenue 1Y (TTM)0.26%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%-1.15%
3.2 Future
SHW is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.32% yearly.
Based on estimates for the next years, SHW will show a small growth in Revenue. The Revenue will grow by 4.46% on average per year.
EPS Next Y5.9%
EPS Next 2Y8.67%
EPS Next 3Y9.98%
EPS Next 5Y8.32%
Revenue Next Year1.35%
Revenue Next 2Y3.03%
Revenue Next 3Y3.67%
Revenue Next 5Y4.46%
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.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 29.80, SHW can be considered very expensive at the moment.
60.00% of the companies in the same industry are cheaper than SHW, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 27.50. SHW is around the same levels.
A Price/Forward Earnings ratio of 25.42 indicates a quite expensive valuation of SHW.
The rest of the industry has a similar Price/Forward Earnings ratio as SHW.
SHW's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 36.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.8 | ||
| Fwd PE | 25.42 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of SHW indicates a slightly more expensive valuation: SHW is more expensive than 68.24% of the companies listed in the same industry.
SHW's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 39.17 | ||
| EV/EBITDA | 21.25 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates SHW does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of SHW may justify a higher PE ratio.
PEG (NY)5.06
PEG (5Y)2.98
EPS Next 2Y8.67%
EPS Next 3Y9.98%
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 3.53.
Compared to an average S&P500 Dividend Yield of 2.35, 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 been paying a dividend for at least 10 years, so it has a reliable track record.
SHW has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)13.53%
Div Incr Years21
Div Non Decr Years21
5.3 Sustainability
27.66% of the earnings are spent on dividend by SHW. This is a low number and sustainable payout ratio.
The dividend of SHW is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP27.66%
EPS Next 2Y8.67%
EPS Next 3Y9.98%
340.07
+0.17 (+0.05%)
Chartmill FA Rating
GICS SectorMaterials
GICS IndustryGroupMaterials
GICS IndustryChemicals
Earnings (Last)
Earnings (Next)
Inst Owners82.53%
Inst Owner Change0%
Ins Owners0.07%
Ins Owner Change-0.78%
Market Cap85.22B
Analysts72.12
Price Target390.92 (14.95%)
Short Float %2.14%
Short Ratio3.36
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.9% |
Yearly Dividend2.86
Dividend Growth(5Y)13.53%
DP27.66%
Div Incr Years21
Div Non Decr Years21
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.8%
Min EPS beat(2)0.29%
Max EPS beat(2)3.31%
EPS beat(4)3
Avg EPS beat(4)0.75%
Min EPS beat(4)-5.78%
Max EPS beat(4)5.18%
EPS beat(8)5
Avg EPS beat(8)4.35%
EPS beat(12)8
Avg EPS beat(12)3.64%
EPS beat(16)9
Avg EPS beat(16)2.47%
Revenue beat(2)0
Avg Revenue beat(2)-2.07%
Min Revenue beat(2)-2.75%
Max Revenue beat(2)-1.39%
Revenue beat(4)0
Avg Revenue beat(4)-1.92%
Min Revenue beat(4)-2.75%
Max Revenue beat(4)-1.39%
Revenue beat(8)2
Avg Revenue beat(8)-1.07%
Revenue beat(12)4
Avg Revenue beat(12)-0.44%
Revenue beat(16)6
Avg Revenue beat(16)-0.4%
PT rev (1m)-0.22%
PT rev (3m)-1.18%
EPS NQ rev (1m)0.07%
EPS NQ rev (3m)-1.97%
EPS NY rev (1m)-0.02%
EPS NY rev (3m)-1.27%
Revenue NQ rev (1m)-0.2%
Revenue NQ rev (3m)-1.62%
Revenue NY rev (1m)-0.08%
Revenue NY rev (3m)-1.14%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.8 | ||
| Fwd PE | 25.42 | ||
| P/S | 3.7 | ||
| P/FCF | 39.17 | ||
| P/OCF | 27.05 | ||
| P/B | 20.63 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.25 |
EPS(TTM)11.41
EY3.36%
EPS(NY)13.38
Fwd EY3.93%
FCF(TTM)8.68
FCFY2.55%
OCF(TTM)12.57
OCFY3.7%
SpS91.93
BVpS16.48
TBVpS-28.22
PEG (NY)5.06
PEG (5Y)2.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.88% | ||
| ROE | 64.89% | ||
| ROCE | 22.62% | ||
| ROIC | 15.78% | ||
| ROICexc | 15.95% | ||
| ROICexgc | 40.91% | ||
| OM | 16.45% | ||
| PM (TTM) | 11.63% | ||
| GM | 48.72% | ||
| FCFM | 9.44% |
ROA(3y)10.23%
ROA(5y)9.93%
ROE(3y)65.2%
ROE(5y)65.66%
ROIC(3y)15.49%
ROIC(5y)14.7%
ROICexc(3y)15.7%
ROICexc(5y)14.9%
ROICexgc(3y)47.86%
ROICexgc(5y)48.91%
ROCE(3y)20.83%
ROCE(5y)19.67%
ROICexcg growth 3Y0.33%
ROICexcg growth 5Y1.49%
ROICexc growth 3Y8.3%
ROICexc growth 5Y7.54%
OM growth 3Y6.82%
OM growth 5Y3.75%
PM growth 3Y7.49%
PM growth 5Y6.16%
GM growth 3Y4.21%
GM growth 5Y1.54%
F-Score7
Asset Turnover0.94
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.33 | ||
| Debt/FCF | 4.95 | ||
| Debt/EBITDA | 2.18 | ||
| Cap/Depr | 154.43% | ||
| Cap/Sales | 4.23% | ||
| Interest Coverage | 9.04 | ||
| Cash Conversion | 71.26% | ||
| Profit Quality | 81.17% | ||
| Current Ratio | 0.77 | ||
| Quick Ratio | 0.45 | ||
| Altman-Z | 4.27 |
F-Score7
WACC8.76%
ROIC/WACC1.8
Cap/Depr(3y)141.7%
Cap/Depr(5y)108.46%
Cap/Sales(3y)3.8%
Cap/Sales(5y)2.98%
Profit Quality(3y)83.69%
Profit Quality(5y)100.89%
High Growth Momentum
Growth
EPS 1Y (TTM)8.98%
EPS 3Y11.65%
EPS 5Y10.02%
EPS Q2Q%3.69%
EPS Next Y5.9%
EPS Next 2Y8.67%
EPS Next 3Y9.98%
EPS Next 5Y8.32%
Revenue 1Y (TTM)0.26%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%-1.15%
Revenue Next Year1.35%
Revenue Next 2Y3.03%
Revenue Next 3Y3.67%
Revenue Next 5Y4.46%
EBIT growth 1Y4.86%
EBIT growth 3Y12.18%
EBIT growth 5Y9.18%
EBIT Next Year19.61%
EBIT Next 3Y12.15%
EBIT Next 5Y7.86%
FCF growth 1Y76.34%
FCF growth 3Y3.62%
FCF growth 5Y0.9%
OCF growth 1Y59%
OCF growth 3Y12%
OCF growth 5Y6.32%