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. SHW scores excellent on profitability, 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
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.
Each year in the past 5 years SHW had a positive operating cash flow.
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.
SHW has a Return On Equity of 64.89%. This is amongst the best in the industry. SHW outperforms 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 7.01%.
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
With an excellent Profit Margin value of 11.63%, SHW belongs to the best of the industry, outperforming 91.76% of the companies in the same industry.
In the last couple of years the Profit Margin of SHW has grown nicely.
The Operating Margin of SHW (16.45%) is better than 82.35% of its industry peers.
In the last couple of years the Operating Margin of SHW has grown nicely.
SHW has a Gross Margin of 48.72%. This is amongst the best in the industry. SHW outperforms 92.94% of its industry peers.
SHW's Gross Margin has improved in the last couple of years.
| 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), SHW is creating value.
The number of shares outstanding for SHW has been reduced compared to 1 year ago.
The number of shares outstanding for SHW has been reduced compared to 5 years ago.
Compared to 1 year ago, SHW has an improved debt to assets ratio.
2.2 Solvency
SHW has an Altman-Z score of 4.44. 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 4.44, SHW belongs to the top of the industry, outperforming 89.41% of the companies in the same industry.
The Debt to FCF ratio of SHW is 4.95, which is a neutral value as it means it would take SHW, 4.95 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of SHW (4.95) is better than 76.47% of its industry peers.
SHW has a Debt/Equity ratio of 2.33. This is a high value indicating a heavy dependency on external financing.
SHW's Debt to Equity ratio of 2.33 is on the low side compared to the rest of the industry. SHW is outperformed by 85.88% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.33 | ||
| Debt/FCF | 4.95 | ||
| Altman-Z | 4.44 |
ROIC/WACC1.81
WACC8.74%
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.
SHW has a Current ratio of 0.77. This is amonst the worse of the industry: SHW underperforms 89.41% 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.
Looking at the Quick ratio, with a value of 0.45, SHW is doing worse than 89.41% of the companies in the same industry.
| 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.
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.
SHW shows a small growth in Revenue. In the last year, the Revenue has grown by 0.26%.
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 small growth in Earnings Per Share. The EPS will grow by 7.39% on average per year.
Based on estimates for the next years, SHW will show a small growth in Revenue. The Revenue will grow by 4.12% on average per year.
EPS Next Y5.91%
EPS Next 2Y8.79%
EPS Next 3Y10.06%
EPS Next 5Y7.39%
Revenue Next Year1.44%
Revenue Next 2Y3.05%
Revenue Next 3Y3.69%
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
SHW is valuated quite expensively with a Price/Earnings ratio of 31.47.
SHW's Price/Earnings ratio is a bit more expensive when compared to the industry. SHW is more expensive than 62.35% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.60. SHW is around the same levels.
A Price/Forward Earnings ratio of 26.78 indicates a quite expensive valuation of SHW.
Compared to the rest of the industry, the Price/Forward Earnings ratio of SHW indicates a slightly more expensive valuation: SHW is more expensive than 63.53% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of SHW to the average of the S&P500 Index (22.43), we can say SHW is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.47 | ||
| Fwd PE | 26.78 |
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 72.94% 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 | 41.37 | ||
| EV/EBITDA | 22.5 |
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)5.32
PEG (5Y)3.14
EPS Next 2Y8.79%
EPS Next 3Y10.06%
5. Dividend
5.1 Amount
SHW has a yearly dividend return of 0.87%, which is pretty low.
Compared to an average industry Dividend Yield of 3.70, SHW has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.36, SHW's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.87% |
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 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.
SHW's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP27.66%
EPS Next 2Y8.79%
EPS Next 3Y10.06%
359.1
-2.9 (-0.8%)
Chartmill FA Rating
GICS SectorMaterials
GICS IndustryGroupMaterials
GICS IndustryChemicals
Earnings (Last)
Earnings (Next)
Inst Owners81.92%
Inst Owner Change0.62%
Ins Owners0.1%
Ins Owner Change2.86%
Market Cap89.99B
Analysts72.94
Price Target391 (8.88%)
Short Float %1.91%
Short Ratio2.32
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.87% |
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)-1.16%
PT rev (3m)-2.6%
EPS NQ rev (1m)-2.04%
EPS NQ rev (3m)-2.49%
EPS NY rev (1m)-0.45%
EPS NY rev (3m)-1.27%
Revenue NQ rev (1m)-1.42%
Revenue NQ rev (3m)-1.62%
Revenue NY rev (1m)-1.06%
Revenue NY rev (3m)-1.55%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.47 | ||
| Fwd PE | 26.78 | ||
| P/S | 3.91 | ||
| P/FCF | 41.37 | ||
| P/OCF | 28.56 | ||
| P/B | 21.79 | ||
| P/tB | N/A | ||
| EV/EBITDA | 22.5 |
EPS(TTM)11.41
EY3.18%
EPS(NY)13.41
Fwd EY3.73%
FCF(TTM)8.68
FCFY2.42%
OCF(TTM)12.57
OCFY3.5%
SpS91.93
BVpS16.48
TBVpS-28.22
PEG (NY)5.32
PEG (5Y)3.14
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 | 4.44 |
F-Score7
WACC8.74%
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 Y5.91%
EPS Next 2Y8.79%
EPS Next 3Y10.06%
EPS Next 5Y7.39%
Revenue 1Y (TTM)0.26%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%-1.15%
Revenue Next Year1.44%
Revenue Next 2Y3.05%
Revenue Next 3Y3.69%
Revenue Next 5Y4.12%
EBIT growth 1Y4.86%
EBIT growth 3Y12.18%
EBIT growth 5Y9.18%
EBIT Next Year20.47%
EBIT Next 3Y12.77%
EBIT Next 5Y7.4%
FCF growth 1Y76.34%
FCF growth 3Y3.62%
FCF growth 5Y0.9%
OCF growth 1Y59%
OCF growth 3Y12%
OCF growth 5Y6.32%