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. While SHW belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. While showing a medium growth rate, SHW is valued expensive at the moment.
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.
In the past 5 years SHW has always been profitable.
Each year in the past 5 years SHW had a positive operating cash flow.
1.2 Ratios
SHW's Return On Assets of 10.88% is amongst the best of the industry. SHW outperforms 96.47% of its industry peers.
The Return On Equity of SHW (64.89%) is better than 100.00% of its industry peers.
With an excellent Return On Invested Capital value of 15.78%, SHW belongs to the best of the industry, outperforming 96.47% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for SHW is significantly above the industry average of 6.84%.
The last Return On Invested Capital (15.78%) for SHW is above the 3 year average (15.49%), which is a sign of increasing profitability.
| 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.
In the last couple of years the Profit Margin of SHW has grown nicely.
Looking at the Operating Margin, with a value of 16.45%, SHW belongs to the top of the industry, outperforming 82.35% 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 48.72%, 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 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
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.
SHW has less shares outstanding than it did 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 4.32. 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 4.32, SHW belongs to the top of the industry, outperforming 89.41% of the companies in the same industry.
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.
The Debt to FCF ratio of SHW (4.95) is better than 77.65% of its industry peers.
A Debt/Equity ratio of 2.33 is on the high side and indicates that SHW has dependencies on debt financing.
With a Debt to Equity ratio value of 2.33, SHW is not doing good in the industry: 84.71% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.33 | ||
| Debt/FCF | 4.95 | ||
| Altman-Z | 4.32 |
ROIC/WACC1.81
WACC8.7%
2.3 Liquidity
A Current Ratio of 0.77 indicates that SHW may have some problems paying its short term obligations.
SHW has a Current ratio of 0.77. This is amonst the worse of the industry: SHW underperforms 90.59% of its industry peers.
A Quick Ratio of 0.45 indicates that SHW may have some problems paying its short term obligations.
The Quick ratio of SHW (0.45) is worse than 91.76% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.77 | ||
| Quick Ratio | 0.45 |
3. Growth
3.1 Past
SHW shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.98%, which is quite good.
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 0.26% 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)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
Based on estimates for the next years, SHW will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.32% on average per year.
The Revenue is expected to grow by 4.46% on average over the next years.
EPS Next Y5.93%
EPS Next 2Y8.68%
EPS Next 3Y10.02%
EPS Next 5Y8.32%
Revenue Next Year1.41%
Revenue Next 2Y3.05%
Revenue Next 3Y3.69%
Revenue Next 5Y4.46%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
SHW is valuated quite expensively with a Price/Earnings ratio of 30.35.
Compared to the rest of the industry, the Price/Earnings ratio of SHW indicates a slightly more expensive valuation: SHW is more expensive than 60.00% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.29, SHW is valued at the same level.
The Price/Forward Earnings ratio is 25.88, which means the current valuation is very expensive for SHW.
60.00% of the companies in the same industry are cheaper than SHW, based on the Price/Forward Earnings ratio.
SHW's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 21.74.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.35 | ||
| Fwd PE | 25.88 |
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 69.41% of the companies in the same industry.
SHW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 39.89 | ||
| EV/EBITDA | 21.61 |
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)5.12
PEG (5Y)3.03
EPS Next 2Y8.68%
EPS Next 3Y10.02%
5. Dividend
5.1 Amount
With a yearly dividend of 0.89%, SHW is not a good candidate for dividend investing.
SHW's Dividend Yield is comparable with the industry average which is at 3.57.
Compared to an average S&P500 Dividend Yield of 2.37, SHW's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.89% |
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
SHW pays out 27.66% 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.
DP27.66%
EPS Next 2Y8.68%
EPS Next 3Y10.02%
346.29
-7.71 (-2.18%)
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 Cap86.78B
Analysts72.12
Price Target390.92 (12.89%)
Short Float %1.83%
Short Ratio2.8
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.89% |
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)-0.02%
PT rev (3m)-1.18%
EPS NQ rev (1m)0.15%
EPS NQ rev (3m)-2.37%
EPS NY rev (1m)0.01%
EPS NY rev (3m)-1.24%
Revenue NQ rev (1m)-0.16%
Revenue NQ rev (3m)-1.79%
Revenue NY rev (1m)-0.03%
Revenue NY rev (3m)-1.21%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.35 | ||
| Fwd PE | 25.88 | ||
| P/S | 3.77 | ||
| P/FCF | 39.89 | ||
| P/OCF | 27.54 | ||
| P/B | 21.01 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.61 |
EPS(TTM)11.41
EY3.29%
EPS(NY)13.38
Fwd EY3.86%
FCF(TTM)8.68
FCFY2.51%
OCF(TTM)12.57
OCFY3.63%
SpS91.93
BVpS16.48
TBVpS-28.22
PEG (NY)5.12
PEG (5Y)3.03
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 | 4.32 |
F-Score7
WACC8.7%
ROIC/WACC1.81
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 Y5.93%
EPS Next 2Y8.68%
EPS Next 3Y10.02%
EPS Next 5Y8.32%
Revenue 1Y (TTM)0.26%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%-1.15%
Revenue Next Year1.41%
Revenue Next 2Y3.05%
Revenue Next 3Y3.69%
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%