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Sherwin-Williams Co SHW

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Morningstar’s Analysis

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Economic Moat




Sherwin-Williams' Exposure to Architectural Demand Supports Solid Second-Quarter Results

Charles Gross Equity Analyst

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.

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Company Profile

Business Description

Sherwin-Williams is the largest provider of architectural paint in the United States. The company has approximately 4,700 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.

101 West Prospect Avenue
Cleveland, OH, 44115-1075
T +1 216 566-2000
Sector Basic Materials
Industry Specialty Chemicals
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 61,111