SHERWIN-WILLIAMS CO/THE (SHW) Stock Fundamental Analysis
NYSE:SHW - New York Stock Exchange, Inc. - US8243481061 - Common Stock - Currency: USD
Overall SHW gets a fundamental rating of 6 out of 10. We evaluated SHW 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.
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.
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.
The Return On Invested Capital of SHW (15.78%) is better than 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 6.84%.
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
SHW has a Profit Margin of 11.63%. This is amongst the best in the industry. SHW outperforms 89.41% of its industry peers.
In the last couple of years the Profit Margin of SHW has grown nicely.
SHW has a better Operating Margin (16.45%) than 82.35% of its industry peers.
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.
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
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.
SHW has a better debt/assets ratio than last year.
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.
SHW has a better Altman-Z score (4.32) than 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.
The Debt to FCF ratio of SHW (4.95) is better than 77.65% 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 84.71% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.33 | ||
| Debt/FCF | 4.95 | ||
| Altman-Z | 4.32 |
ROIC/WACC1.82
WACC8.69%
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 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
The Earnings Per Share has grown by an nice 8.98% over the past year.
The Earnings Per Share has been growing by 10.02% on average over the past years. This is quite good.
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
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.
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 Y5.93%
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
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.
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
Based on the Price/Earnings ratio of 30.09, the valuation of SHW can be described as expensive.
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 26.98. SHW is around the same levels.
With a Price/Forward Earnings ratio of 25.66, SHW can be considered very expensive at the moment.
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 62.35% 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 (21.49), we can say SHW is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.09 | ||
| Fwd PE | 25.66 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, SHW is valued a bit more expensive than the industry average as 70.59% of the companies are valued more cheaply.
SHW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 39.55 | ||
| EV/EBITDA | 21.58 |
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)5.08
PEG (5Y)3
EPS Next 2Y8.68%
EPS Next 3Y10.02%
5. Dividend
5.1 Amount
With a yearly dividend of 0.92%, SHW is not a good candidate for dividend investing.
SHW's Dividend Yield is comparable with the industry average which is at 3.69.
Compared to an average S&P500 Dividend Yield of 2.42, SHW's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.92% |
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.
SHW's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP27.66%
EPS Next 2Y8.68%
EPS Next 3Y10.02%
343.36
-2.36 (-0.68%)
Chartmill FA Rating
GICS SectorMaterials
GICS IndustryGroupMaterials
GICS IndustryChemicals
Earnings (Last)
Earnings (Next)
Inst Owners82.53%
Inst Owner Change0.57%
Ins Owners0.07%
Ins Owner Change-0.78%
Market Cap86.05B
Analysts72.94
Price Target390.92 (13.85%)
Short Float %1.95%
Short Ratio2.73
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.92% |
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)-1.54%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-2.51%
EPS NY rev (1m)0.01%
EPS NY rev (3m)-1.24%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.64%
Revenue NY rev (1m)-0.03%
Revenue NY rev (3m)-1.21%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.09 | ||
| Fwd PE | 25.66 | ||
| P/S | 3.74 | ||
| P/FCF | 39.55 | ||
| P/OCF | 27.31 | ||
| P/B | 20.83 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.58 |
EPS(TTM)11.41
EY3.32%
EPS(NY)13.38
Fwd EY3.9%
FCF(TTM)8.68
FCFY2.53%
OCF(TTM)12.57
OCFY3.66%
SpS91.93
BVpS16.48
TBVpS-28.22
PEG (NY)5.08
PEG (5Y)3
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
WACC8.69%
ROIC/WACC1.82
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%