SHERWIN-WILLIAMS CO/THE (SHW) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:SHW - US8243481061 - Common Stock
348.52 USD
-2.11 (-0.6%)
348.52 USD
0 (0%)
We assign a fundamental rating of 6 out of 10 to SHW. SHW was compared to 82 industry peers in the Chemicals industry. While SHW belongs to the best of the industry regarding profitability, 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.
- SHW had a positive operating cash flow in the past year.
- In the past 5 years SHW has always been profitable.
- In the past 5 years SHW always reported a positive cash flow from operatings.
1.2 Ratios
- SHW's Return On Assets of 9.81% is amongst the best of the industry. SHW outperforms 95.12% of its industry peers.
- SHW's Return On Equity of 58.12% is amongst the best of the industry. SHW outperforms 100.00% of its industry peers.
- SHW has a Return On Invested Capital of 13.81%. This is amongst the best in the industry. SHW outperforms 92.68% of its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital 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 87.80% of its industry peers.
- In the last couple of years the Profit Margin of SHW has grown nicely.
- The Operating Margin of SHW (15.81%) is better than 78.05% of its industry peers.
- In the last couple of years the Operating Margin of SHW has grown nicely.
- SHW has a better Gross Margin (48.88%) than 93.90% of its industry peers.
- SHW's Gross Margin has improved in the last couple of years.
| 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.
- The debt/assets ratio for SHW has been reduced compared to a year ago.
2.2 Solvency
- SHW has an Altman-Z score of 4.15. This indicates that SHW is financially healthy and has little risk of bankruptcy at the moment.
- SHW has a better Altman-Z score (4.15) than 89.02% of its industry peers.
- The Debt to FCF ratio of SHW is 4.75, which is a neutral value as it means it would take SHW, 4.75 years of fcf income to pay off all of its debts.
- SHW's Debt to FCF ratio of 4.75 is amongst the best of the industry. SHW outperforms 81.71% of its industry peers.
- SHW has a Debt/Equity ratio of 2.52. This is a high value indicating a heavy dependency on external financing.
- Looking at the Debt to Equity ratio, with a value of 2.52, SHW is doing worse than 84.15% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.52 | ||
| Debt/FCF | 4.75 | ||
| Altman-Z | 4.15 |
ROIC/WACC0.95
WACC14.55%
2.3 Liquidity
- A Current Ratio of 0.82 indicates that SHW may have some problems paying its short term obligations.
- Looking at the Current ratio, with a value of 0.82, SHW is doing worse than 95.12% of the companies in the same industry.
- 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.
- SHW has a Quick ratio of 0.52. This is amonst the worse of the industry: SHW underperforms 92.68% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.82 | ||
| Quick Ratio | 0.52 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 2.35% over the past year.
- 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.
- The Revenue has been growing slightly by 0.96% in the past 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
- SHW is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.04% yearly.
- The Revenue is expected to grow by 3.89% on average over the next years.
EPS Next Y1.41%
EPS Next 2Y5.68%
EPS Next 3Y7.79%
EPS Next 5Y8.04%
Revenue Next Year1.7%
Revenue Next 2Y3.23%
Revenue Next 3Y3.66%
Revenue Next 5Y3.89%
3.3 Evolution
- The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- SHW is valuated quite expensively with a Price/Earnings ratio of 30.82.
- Compared to the rest of the industry, the Price/Earnings ratio of SHW is on the same level as its industry peers.
- When comparing the Price/Earnings ratio of SHW to the average of the S&P500 Index (27.21), we can say SHW is valued inline with the index average.
- With a Price/Forward Earnings ratio of 27.54, SHW can be considered very expensive at the moment.
- The rest of the industry has a similar Price/Forward Earnings ratio as SHW.
- The average S&P500 Price/Forward Earnings ratio is at 24.26. SHW is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.82 | ||
| Fwd PE | 27.54 |
4.2 Price Multiples
- SHW's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. SHW is more expensive than 79.27% of the companies in the same industry.
- SHW's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 35.61 | ||
| EV/EBITDA | 22.24 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The excellent profitability rating of SHW may justify a higher PE ratio.
PEG (NY)21.83
PEG (5Y)3.08
EPS Next 2Y5.68%
EPS Next 3Y7.79%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.89%, SHW is not a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 2.28, SHW is paying slightly less dividend.
- 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 | 0.89% |
5.2 History
- The dividend of SHW is nicely growing with an annual growth rate of 13.53%!
- SHW has been paying a dividend for at least 10 years, so it has 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
- SHW pays out 30.09% of its income as dividend. This is a sustainable payout ratio.
- The dividend of SHW is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP30.09%
EPS Next 2Y5.68%
EPS Next 3Y7.79%
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 1.41% 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%.