SHERWIN-WILLIAMS CO/THE (SHW) Stock Fundamental Analysis
NYSE:SHW - New York Stock Exchange, Inc. - US8243481061 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to SHW. SHW was compared to 85 industry peers in the Chemicals industry. SHW has an excellent profitability rating, but 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.
SHW had a positive operating cash flow in the past year.
SHW had positive earnings in each of the past 5 years.
SHW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
SHW has a Return On Assets of 10.88%. This is amongst the best in 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.
SHW's Return On Invested Capital of 15.78% is amongst the best of the industry. SHW outperforms 96.47% of its industry peers.
SHW had an Average Return On Invested Capital over the past 3 years of 15.49%. This 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
With an excellent Profit Margin value of 11.63%, SHW belongs to the best 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.
With an excellent Operating Margin value of 16.45%, SHW belongs to the best 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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), SHW is creating some 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 4.41. This indicates that SHW is financially healthy and has little risk of bankruptcy at the moment.
SHW has a Altman-Z score of 4.41. This is amongst the best in the industry. SHW outperforms 88.24% 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.
With a decent Debt to FCF ratio value of 4.95, SHW is doing good in the industry, outperforming 77.65% of the companies in the same industry.
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 | 4.41 |
ROIC/WACC1.78
WACC8.87%
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.
Looking at the Current ratio, with a value of 0.77, SHW is doing worse than 90.59% of the companies in the same industry.
A Quick Ratio of 0.45 indicates that SHW may have some problems paying its short term obligations.
With a Quick ratio value of 0.45, SHW is not doing good in the industry: 91.76% of the companies in the same industry are doing better.
| 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.
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 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 Y5.91%
EPS Next 2Y8.79%
EPS Next 3Y10.06%
EPS Next 5Y8.32%
Revenue Next Year1.43%
Revenue Next 2Y3.09%
Revenue Next 3Y3.7%
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.
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
SHW is valuated quite expensively with a Price/Earnings ratio of 31.62.
Based on the Price/Earnings ratio, SHW is valued a bit more expensive than 60.00% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.53, SHW is valued at the same level.
With a Price/Forward Earnings ratio of 26.90, SHW can be considered very expensive at the moment.
64.71% of the companies in the same industry are cheaper than SHW, based on the Price/Forward Earnings ratio.
SHW is valuated rather expensively when we compare the Price/Forward Earnings ratio to 22.27, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.62 | ||
| Fwd PE | 26.9 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, SHW is valued a bit more expensive than the industry average as 71.76% of the companies are valued more cheaply.
SHW's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 41.55 | ||
| EV/EBITDA | 22.27 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
SHW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)5.35
PEG (5Y)3.16
EPS Next 2Y8.79%
EPS Next 3Y10.06%
5. Dividend
5.1 Amount
With a yearly dividend of 0.88%, SHW is not a good candidate for dividend investing.
SHW's Dividend Yield is comparable with the industry average which is at 3.74.
With a Dividend Yield of 0.88, SHW pays less dividend than the S&P500 average, which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.88% |
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 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 2Y8.79%
EPS Next 3Y10.06%
360.73
+2.78 (+0.78%)
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 Change-0.65%
Market Cap90.40B
Analysts72.94
Price Target391.79 (8.61%)
Short Float %2.39%
Short Ratio3.19
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.88% |
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)0.2%
PT rev (3m)-1.84%
EPS NQ rev (1m)-0.43%
EPS NQ rev (3m)-2.51%
EPS NY rev (1m)-0.45%
EPS NY rev (3m)-1.21%
Revenue NQ rev (1m)-0.13%
Revenue NQ rev (3m)-1.64%
Revenue NY rev (1m)-0.05%
Revenue NY rev (3m)-1.18%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.62 | ||
| Fwd PE | 26.9 | ||
| P/S | 3.92 | ||
| P/FCF | 41.55 | ||
| P/OCF | 28.69 | ||
| P/B | 21.89 | ||
| P/tB | N/A | ||
| EV/EBITDA | 22.27 |
EPS(TTM)11.41
EY3.16%
EPS(NY)13.41
Fwd EY3.72%
FCF(TTM)8.68
FCFY2.41%
OCF(TTM)12.57
OCFY3.49%
SpS91.93
BVpS16.48
TBVpS-28.22
PEG (NY)5.35
PEG (5Y)3.16
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 | 4.41 |
F-Score7
WACC8.87%
ROIC/WACC1.78
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 5Y8.32%
Revenue 1Y (TTM)0.26%
Revenue growth 3Y5.02%
Revenue growth 5Y5.23%
Sales Q2Q%-1.15%
Revenue Next Year1.43%
Revenue Next 2Y3.09%
Revenue Next 3Y3.7%
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%