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. 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.
In the past year SHW had a positive cash flow from operations.
SHW had positive earnings in each of the past 5 years.
In the past 5 years SHW always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 10.88%, SHW belongs to the top of the industry, outperforming 96.47% of the companies in the same industry.
With an excellent Return On Equity value of 64.89%, SHW belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
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.
Measured over the past 3 years, the Average Return On Invested Capital for SHW is significantly above the industry average of 6.83%.
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
Looking at the Profit Margin, with a value of 11.63%, SHW belongs to the top of the industry, outperforming 89.41% of the companies in the same industry.
In the last couple of years the Profit Margin of SHW has grown nicely.
SHW has a Operating Margin of 16.45%. This is amongst the best in the industry. SHW outperforms 82.35% of its industry peers.
In the last couple of years the Operating Margin of SHW has grown nicely.
With an excellent Gross Margin value of 48.72%, SHW belongs to the best 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 just above the Cost of Capital (WACC), so SHW is still creating some value.
The number of shares outstanding for SHW has been reduced compared to 1 year ago.
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 4.28. 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 4.28, 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.
The Debt to Equity ratio of SHW (2.33) is worse than 84.71% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.33 | ||
| Debt/FCF | 4.95 | ||
| Altman-Z | 4.28 |
ROIC/WACC1.79
WACC8.83%
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.
Looking at the Quick ratio, with a value of 0.45, SHW is doing worse than 91.76% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.77 | ||
| Quick Ratio | 0.45 |
3. Growth
3.1 Past
SHW shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 1.93%.
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 0.20%.
SHW shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 5.23% yearly.
EPS 1Y (TTM)1.93%
EPS 3Y11.65%
EPS 5Y10.02%
EPS Q2Q%-8.65%
Revenue 1Y (TTM)0.2%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%0.69%
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 Y5.9%
EPS Next 2Y8.67%
EPS Next 3Y9.98%
EPS Next 5Y8.32%
Revenue Next Year1.35%
Revenue Next 2Y3.03%
Revenue Next 3Y3.67%
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.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 30.92, the valuation of SHW can be described as expensive.
Based on the Price/Earnings ratio, SHW is valued a bit more expensive than 61.18% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.69. SHW is around the same levels.
A Price/Forward Earnings ratio of 25.63 indicates a quite expensive valuation of SHW.
The rest of the industry has a similar Price/Forward Earnings ratio as SHW.
SHW is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 37.36, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.92 | ||
| Fwd PE | 25.63 |
4.2 Price Multiples
68.24% of the companies in the same industry are cheaper than SHW, based on the Enterprise Value to EBITDA ratio.
The rest of the industry has a similar Price/Free Cash Flow ratio as SHW.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 39.5 | ||
| EV/EBITDA | 21.26 |
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.
SHW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)5.24
PEG (5Y)3.09
EPS Next 2Y8.67%
EPS Next 3Y9.98%
5. Dividend
5.1 Amount
SHW has a yearly dividend return of 0.93%, which is pretty low.
SHW's Dividend Yield is comparable with the industry average which is at 3.64.
With a Dividend Yield of 0.93, SHW pays less dividend than the S&P500 average, which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.93% |
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 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
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 2Y8.67%
EPS Next 3Y9.98%
342.94
+2.87 (+0.84%)
Chartmill FA Rating
GICS SectorMaterials
GICS IndustryGroupMaterials
GICS IndustryChemicals
Earnings (Last)
Earnings (Next)
Inst Owners82.53%
Inst Owner Change-0.36%
Ins Owners0.07%
Ins Owner Change-0.78%
Market Cap85.94B
Analysts72.12
Price Target391.55 (14.17%)
Short Float %2.14%
Short Ratio3.36
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.93% |
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)-0.06%
PT rev (3m)-1.02%
EPS NQ rev (1m)0.07%
EPS NQ rev (3m)-1.97%
EPS NY rev (1m)-0.03%
EPS NY rev (3m)-0.47%
Revenue NQ rev (1m)-0.2%
Revenue NQ rev (3m)-1.62%
Revenue NY rev (1m)-0.06%
Revenue NY rev (3m)-1.14%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.92 | ||
| Fwd PE | 25.63 | ||
| P/S | 3.73 | ||
| P/FCF | 39.5 | ||
| P/OCF | 27.27 | ||
| P/B | 20.81 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.26 |
EPS(TTM)11.09
EY3.23%
EPS(NY)13.38
Fwd EY3.9%
FCF(TTM)8.68
FCFY2.53%
OCF(TTM)12.57
OCFY3.67%
SpS91.93
BVpS16.48
TBVpS-28.22
PEG (NY)5.24
PEG (5Y)3.09
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 | 4.28 |
F-Score7
WACC8.83%
ROIC/WACC1.79
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)1.93%
EPS 3Y11.65%
EPS 5Y10.02%
EPS Q2Q%-8.65%
EPS Next Y5.9%
EPS Next 2Y8.67%
EPS Next 3Y9.98%
EPS Next 5Y8.32%
Revenue 1Y (TTM)0.2%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%0.69%
Revenue Next Year1.35%
Revenue Next 2Y3.03%
Revenue Next 3Y3.67%
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%