Analyst Note| Charles Gross |
Sherwin-Williams fared well during the second quarter, given the weak economic backdrop. Consolidated sales dropped 5.6% versus last year, and adjusted EBITDA ticked higher to $978 million. Elevated do-it-yourself painting activity and the sharp decline in energy prices were two substantial tailwinds. We've modestly raised our near-term forecasts to recalibrate for better-than-expected Americas group segment sales and profit generation. In combination with time value of money effects, we raise our fair value estimate to $360 per share from $350. Our narrow moat rating stands. We view the shares as extremely overvalued, trading at 20.2 times consensus forward EBITDA, representing yet another all-time-high for the company.