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Sherwin-Williams Co SHW

Morningstar Rating
$337.10 +1.87 (0.56%)
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Company Report

We Still Expect Single-Family Construction and Repair and Remodel Spending to Grow in 2024

New single-family home sales increased 4% in 2023 to 666,000 units, as homebuilders capitalized on a dearth of existing for-sale inventory while also offering more sales incentives, cutting base home prices, and building smaller homes to improve affordability. By the fourth quarter of 2023, homebuilders began to pull back on sales incentives as the average 30-year fixed mortgage rate retreated from 7.62% in October 2023 to 6.64% in January 2024. However, mortgage rates have trended higher recently, and we now forecast the average 30-year fixed rate will be 6.50% in 2024, up from our previous forecast of 6.10%. Even so, that’s lower than the 2023 average of 6.81%, and we think homebuilders won’t hesitate to increase sales incentives if needed; they still enjoyed above-average gross profit margins last year with elevated incentives. As such, in 2024, we think new-home sales will increase 9% to 730,000 units and single-family housing starts will increase 4% to 985,000 units. However, we expect total housing starts will decline roughly 5% to 1,345,000 units due to a 23% decline in multifamily starts to 360,000 units, as there’s currently approximately 1,000,000 multifamily units under construction—the largest backlog in at least 50 years.

Price vs Fair Value

SHW is trading at a 58% premium.
Price
$337.10
Fair Value
$796.00
Uncertainty
Medium
1-Star Price
$324.30
5-Star Price
$578.50
Economic Moat
Yhd
Capital Allocation
Jpcfjfnyw

Bulls Say, Bears Say

Bulls

Professional painters have favored Sherwin products for decades, leading to strong brand loyalty and pricing power.

Bears

Residential repainting surged during the COVID-19 pandemic, which could result in a near-term glut.

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News

Trading Information

Previous Close Price
$335.23
Day Range
$334.14337.49
52-Week Range
$205.43337.49
Bid/Ask
$326.38 / $337.10
Market Cap
$85.78 Bil
Volume/Avg
1.1 Mil / 1.5 Mil

Key Statistics

Price/Earnings (Normalized)
32.45
Price/Sales
3.78
Dividend Yield (Trailing)
0.75%
Dividend Yield (Forward)
0.85%
Total Yield
2.42%

Company Profile

Sherwin-Williams is the largest provider of architectural paint in the United States. The company has over 5,000 stores and sells premium paint at higher price points than most competitors. Sherwin-Williams also sells paint-related products in big-box stores and provides coatings for original equipment manufacturers.
Sector
Basic Materials
Industry
Specialty Chemicals
Stock Style Box
Large Core
Total Number of Employees
64,088

Competitors

Valuation

Metric
SHW
MAS
PPG
Price/Earnings (Normalized)
32.4520.0218.15
Price/Book Value
23.094.18
Price/Sales
3.782.211.81
Price/Cash Flow
23.4415.0115.75
Price/Earnings
SHW
MAS
PPG

Financial Strength

Metric
SHW
MAS
PPG
Quick Ratio
0.411.020.96
Current Ratio
0.831.681.47
Interest Coverage
8.3912.597.51
Quick Ratio
SHW
MAS
PPG

Profitability

Metric
SHW
MAS
PPG
Return on Assets (Normalized)
11.15%16.37%8.42%
Return on Equity (Normalized)
73.63%24.67%
Return on Invested Capital (Normalized)
18.14%28.30%12.67%
Return on Assets
SHW
MAS
PPG
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