SHERWIN-WILLIAMS CO/THE (SHW) Stock Fundamental Analysis
NYSE:SHW - New York Stock Exchange, Inc. - US8243481061 - Common Stock - Currency: USD
Taking everything into account, SHW scores 6 out of 10 in our fundamental rating. SHW was compared to 85 industry peers in the Chemicals industry. While SHW has a great profitability rating, 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.
SHW had a positive operating cash flow in the past year.
SHW had positive earnings in each of the past 5 years.
Each year in the past 5 years SHW had a positive operating cash flow.
1.2 Ratios
SHW has a better Return On Assets (11.35%) than 96.47% of its industry peers.
SHW has a better Return On Equity (66.19%) than 100.00% of its industry peers.
SHW has a Return On Invested Capital of 16.62%. This is amongst the best in the industry. SHW outperforms 96.47% 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 7.01%.
The 3 year average ROIC (15.49%) for SHW is below the current ROIC(16.62%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.35% | ||
| ROE | 66.19% | ||
| ROIC | 16.62% |
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
Looking at the Profit Margin, with a value of 11.61%, SHW belongs to the top of the industry, outperforming 92.94% of the companies in the same industry.
In the last couple of years the Profit Margin of SHW has grown nicely.
With an excellent Operating Margin value of 16.29%, SHW belongs to the best of the industry, outperforming 85.88% of the companies in the same industry.
In the last couple of years the Operating Margin of SHW has grown nicely.
Looking at the Gross Margin, with a value of 48.47%, SHW belongs to the top of the industry, outperforming 92.94% of the companies in the same industry.
SHW's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.29% | ||
| PM (TTM) | 11.61% | ||
| GM | 48.47% |
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 well above the Cost of Capital (WACC), so SHW is creating value.
SHW has less shares outstanding than it did 1 year ago.
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 4.43. This indicates that SHW is financially healthy and has little risk of bankruptcy at the moment.
SHW's Altman-Z score of 4.43 is amongst the best of the industry. SHW outperforms 90.59% of its industry peers.
SHW has a debt to FCF ratio of 4.84. This is a neutral value as SHW would need 4.84 years to pay back of all of its debts.
SHW's Debt to FCF ratio of 4.84 is fine compared to the rest of the industry. SHW outperforms 77.65% of its industry peers.
SHW has a Debt/Equity ratio of 2.23. This is a high value indicating a heavy dependency on external financing.
SHW has a worse Debt to Equity ratio (2.23) than 85.88% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.23 | ||
| Debt/FCF | 4.84 | ||
| Altman-Z | 4.43 |
ROIC/WACC1.99
WACC8.36%
2.3 Liquidity
SHW has a Current Ratio of 0.79. 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 Current ratio value of 0.79, SHW is not doing good in the industry: 87.06% of the companies in the same industry are doing better.
A Quick Ratio of 0.46 indicates that SHW may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.46, SHW is doing worse than 89.41% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.79 | ||
| Quick Ratio | 0.46 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 9.57% over the past year.
The Earnings Per Share has been growing by 10.02% on average over the past years. This is quite good.
The Revenue has been growing slightly by 0.20% in the past year.
The Revenue has been growing slightly by 5.23% on average over the past years.
EPS 1Y (TTM)9.57%
EPS 3Y11.65%
EPS 5Y10.02%
EPS Q2Q%15.47%
Revenue 1Y (TTM)0.2%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%0.86%
3.2 Future
The Earnings Per Share is expected to grow by 7.39% on average over the next years.
The Revenue is expected to grow by 4.12% on average over the next years.
EPS Next Y6.39%
EPS Next 2Y9.48%
EPS Next 3Y10.54%
EPS Next 5Y7.39%
Revenue Next Year2.52%
Revenue Next 2Y3.75%
Revenue Next 3Y4.32%
Revenue Next 5Y4.12%
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 decreasing.
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
A Price/Earnings ratio of 29.42 indicates a quite expensive valuation of SHW.
60.00% of the companies in the same industry are cheaper than SHW, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of SHW to the average of the S&P500 Index (28.29), we can say SHW is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 27.66, the valuation of SHW can be described as expensive.
Based on the Price/Forward Earnings ratio, SHW is valued a bit more expensive than the industry average as 60.00% of the companies are valued more cheaply.
SHW is valuated rather expensively when we compare the Price/Forward Earnings ratio to 21.08, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.42 | ||
| Fwd PE | 27.66 |
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 74.12% of the companies listed 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 | 40.25 | ||
| EV/EBITDA | 21.22 |
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)4.6
PEG (5Y)2.94
EPS Next 2Y9.48%
EPS Next 3Y10.54%
5. Dividend
5.1 Amount
SHW has a yearly dividend return of 0.95%, which is pretty low.
Compared to an average industry Dividend Yield of 4.02, SHW has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.52, SHW's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.95% |
5.2 History
The dividend of SHW is nicely growing with an annual growth rate of 13.53%!
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
SHW pays out 26.98% 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.
DP26.98%
EPS Next 2Y9.48%
EPS Next 3Y10.54%
333.38
+2.1 (+0.63%)
Chartmill FA Rating
GICS SectorMaterials
GICS IndustryGroupMaterials
GICS IndustryChemicals
Earnings (Last)
Earnings (Next)
Inst Owners81.92%
Inst Owner Change0.57%
Ins Owners0.1%
Ins Owner Change2.86%
Market Cap83.85B
Analysts72.12
Price Target395.59 (18.66%)
Short Float %2.82%
Short Ratio3.6
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.95% |
Yearly Dividend2.86
Dividend Growth(5Y)13.53%
DP26.98%
Div Incr Years21
Div Non Decr Years21
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-2.75%
Min EPS beat(2)-5.78%
Max EPS beat(2)0.29%
EPS beat(4)2
Avg EPS beat(4)-0.81%
Min EPS beat(4)-5.78%
Max EPS beat(4)5.18%
EPS beat(8)5
Avg EPS beat(8)5.59%
EPS beat(12)8
Avg EPS beat(12)3.63%
EPS beat(16)9
Avg EPS beat(16)3.76%
Revenue beat(2)0
Avg Revenue beat(2)-1.5%
Min Revenue beat(2)-1.6%
Max Revenue beat(2)-1.39%
Revenue beat(4)0
Avg Revenue beat(4)-2.09%
Min Revenue beat(4)-3.47%
Max Revenue beat(4)-1.39%
Revenue beat(8)3
Avg Revenue beat(8)-0.11%
Revenue beat(12)5
Avg Revenue beat(12)-0.14%
Revenue beat(16)7
Avg Revenue beat(16)-0.09%
PT rev (1m)-0.89%
PT rev (3m)-1.48%
EPS NQ rev (1m)-1.18%
EPS NQ rev (3m)-6.5%
EPS NY rev (1m)-0.76%
EPS NY rev (3m)-6.59%
Revenue NQ rev (1m)-0.29%
Revenue NQ rev (3m)-1.78%
Revenue NY rev (1m)-0.13%
Revenue NY rev (3m)-1.49%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.42 | ||
| Fwd PE | 27.66 | ||
| P/S | 3.63 | ||
| P/FCF | 40.25 | ||
| P/OCF | 26.59 | ||
| P/B | 20.7 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.22 |
EPS(TTM)11.33
EY3.4%
EPS(NY)12.05
Fwd EY3.62%
FCF(TTM)8.28
FCFY2.48%
OCF(TTM)12.54
OCFY3.76%
SpS91.84
BVpS16.11
TBVpS-28.08
PEG (NY)4.6
PEG (5Y)2.94
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.35% | ||
| ROE | 66.19% | ||
| ROCE | 22.36% | ||
| ROIC | 16.62% | ||
| ROICexc | 16.82% | ||
| ROICexgc | 47.15% | ||
| OM | 16.29% | ||
| PM (TTM) | 11.61% | ||
| GM | 48.47% | ||
| FCFM | 9.02% |
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 Turnover0.98
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.23 | ||
| Debt/FCF | 4.84 | ||
| Debt/EBITDA | 2.06 | ||
| Cap/Depr | 171.47% | ||
| Cap/Sales | 4.63% | ||
| Interest Coverage | 9.25 | ||
| Cash Conversion | 71.89% | ||
| Profit Quality | 77.69% | ||
| Current Ratio | 0.79 | ||
| Quick Ratio | 0.46 | ||
| Altman-Z | 4.43 |
F-Score7
WACC8.36%
ROIC/WACC1.99
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)9.57%
EPS 3Y11.65%
EPS 5Y10.02%
EPS Q2Q%15.47%
EPS Next Y6.39%
EPS Next 2Y9.48%
EPS Next 3Y10.54%
EPS Next 5Y7.39%
Revenue 1Y (TTM)0.2%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%0.86%
Revenue Next Year2.52%
Revenue Next 2Y3.75%
Revenue Next 3Y4.32%
Revenue Next 5Y4.12%
EBIT growth 1Y4.42%
EBIT growth 3Y12.18%
EBIT growth 5Y9.18%
EBIT Next Year20.47%
EBIT Next 3Y12.77%
EBIT Next 5Y7.4%
FCF growth 1Y-20.9%
FCF growth 3Y3.62%
FCF growth 5Y0.9%
OCF growth 1Y-10.47%
OCF growth 3Y12%
OCF growth 5Y6.32%