Sherwin-Williams: Time To Invest?

Should you invest in Sherwin-Williams right now? Well, it depends on your risk appetite and investment horizon.

Sherwin-Williams (SHW) is one of the biggest paint companies in the world, with well-known brands like Dutch Boy, Minwax, and Krylon. The company has a strong market presence in the Americas and also operates in Europe, Asia, and Australia.

As of June 29, 2024, the stock price of Sherwin-Williams was $298.43, with a 52-week range of $221.76 to $348.37. The company has a market capitalization of 80.215 billion and is expected to announce earnings on July 23, 2024.

Recent analyst ratings for Sherwin-Williams have been mixed, with some firms maintaining a Buy rating and others downgrading the stock to Neutral or Hold. The stock has a Zacks Rank of #2 (Buy) and a VGM Score of A, indicating it could be a good growth stock for the long term.

When considering whether to invest in Sherwin-Williams, it's important to assess the company's fundamentals, competitive position, and broader industry trends. While past performance doesn't guarantee future results, it's worth noting that SHW has a strong historical track record, with a +25.41% average annual return since 1988, more than double the S&P 500.

In summary, whether you choose to invest in Sherwin-Williams now depends on your investment strategy and risk tolerance. It's always recommended to conduct your own due diligence and consult with a financial advisor before making any investment decisions.

Sherwin-Williams' stock price and performance

Sherwin-Williams Stock Price and Performance

Overview

The Sherwin-Williams Company, commonly referred to as Sherwin-Williams, is a paint and coatings company headquartered in Cleveland, Ohio, with operations in North and South America, the Caribbean, Europe, Asia, and Australia. The company manufactures and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers.

Stock Price

As of June 29, 2024, the Sherwin-Williams stock price was $298.43, with a 52-week high of $348.37 and a 52-week low of $221.76. The stock is listed on the NYSE under the ticker symbol SHW.

Stock Performance

Sherwin-Williams has shown positive stock price movement in the short term. On May 15, 2024, the stock price rose by 0.739%, and it has risen in 8 of the last 10 trading days. The stock has a short-term falling trend, and analysts predict a further fall of -7.02% over the next 3 months, with an expected price range of $274.37 to $310.29.

Analyst Recommendations

Analysts' recommendations for Sherwin-Williams stock vary, with some suggesting a "Strong Buy," while others recommend holding or selling. The stock has a Zacks Rank of #2 (Buy) and a VGM Score of A. It is also rated as a Zacks Rank 3, indicating an inline return relative to the market in the short term. The company's growth prospects and financial health have earned it a Growth Score of D and a Value Score of C.

Investment Considerations

When considering whether to invest in Sherwin-Williams, it is essential to analyze the company's competitive position, industry trends, and broader economic conditions. Additionally, investors should evaluate the company's fundamentals, such as its book value per share, current assets, and net income. Sherwin-Williams' management has been actively repurchasing shares, and the company has a history of dividend payments.

Risks

As with any investment, there are risks associated with investing in Sherwin-Williams. The company's stock price is subject to market risk and may be influenced by various economic and industry-specific factors. Additionally, investors should consider the company's financial health, growth prospects, and the potential impact of competitive forces in the industry.

In conclusion, whether to invest in Sherwin-Williams stock depends on various factors, including your investment goals, risk tolerance, and time horizon. While the company has shown positive short-term price movement and has strong growth prospects, it is essential to conduct thorough research and carefully consider all relevant factors before making any investment decisions.

The company's financial health and growth prospects

The Sherwin-Williams Company's financial health and growth prospects are promising, with a Zacks Rank of 3 and a VGM Score of C, indicating it may be a neutral pick for value investors. The company's recent price changes and earnings estimate revisions suggest it is a good stock for momentum investors, with a Momentum Score of B.

Sherwin-Williams has a Growth Style Score of B, indicating a positive growth outlook. The company is expected to achieve year-over-year earnings growth of 12.3% for the current fiscal year. This positive outlook is supported by upward earnings estimate revisions, with two analysts revising their estimates upwards in the last 60 days, resulting in a $0.02 increase in the Zacks Consensus Estimate to $9.80 per share. Sherwin-Williams also has an impressive average earnings surprise of 11%.

The company's financial health is further demonstrated by its aggressive share buyback strategy and the maintenance of its 'Buy' rating by investment firm Jefferies, with a steady price target of $370.00.

In terms of valuation, Sherwin-Williams has a P/E ratio of 20, which is generally considered favourable for value investors. Additionally, the company's P/B ratio of 22.69 X suggests it may be overpriced, and investors should consider the company's market performance and probability of bankruptcy to ensure sustainability.

Overall, Sherwin-Williams' financial health and growth prospects indicate it has the potential to perform in line with the market. The company's strong growth outlook, positive earnings revisions, and impressive average earnings surprise make it an attractive investment opportunity.

Sherwin-Williams' competitive position and industry outlook

Sherwin-Williams is a company that produces and distributes paints, coatings, and other innovative solutions for a variety of applications. The company has a strong competitive position in the market, with a focus on research and development, sustainability, and employee welfare. They have a large global presence, serving customers in over 120 countries. The company has received numerous awards and recognition for its business practices and has a strong financial outlook.

Competitive Position

Sherwin-Williams has a competitive advantage due to its diverse range of products, including paints, coatings, and other innovative solutions. The company's products are used in a variety of applications, from tall buildings to automotive coatings. They have a strong focus on research and development, with dedicated teams working on product innovation and delivery processes.

The company also values sustainability and integrates it into its business operations and product development. Additionally, Sherwin-Williams prioritises employee welfare, offering rewards, benefits, and flexibility to enhance their employees' health and well-being. They also promote an inclusive and diverse workplace, which has been recognised by multiple awards and accolades.

Industry Outlook

Sherwin-Williams has a positive industry outlook, with a strong financial performance and growth prospects. The company has been recognised as a top employer and industry innovator, with awards from Forbes, Newsweek, and the Wall Street Journal. Their commitment to sustainability and employee welfare is likely to contribute to their long-term success and stability.

The company's stock has been rated as a Zacks Rank 3, indicating an inline return relative to the market in the short term. Their VGM Score of C indicates that they are a neutral pick for value investors, with a potential to perform in line with the market. The company's growth prospects are also promising, with a focus on expanding their business and developing new opportunities.

The impact of broader economic conditions and market trends

When considering an investment in Sherwin-Williams, it is important to look at the broader economic conditions and market trends that may impact the company's performance. Here are some key points to consider:

• Sherwin-Williams' performance is influenced by broader economic factors such as interest rates and the health of the property market. For example, with the Federal Reserve's interest rate hikes, the new residential housing market is facing challenges, which can impact the demand for paints and coatings.
• The company's results are also affected by raw material costs, particularly Titanium dioxide (TiO2), which is a crucial raw material in the paint manufacturing process. TiO2 costs have been volatile and are often correlated with crude oil prices.
• Sherwin-Williams' growth strategy includes passing on cost inflation to its customers, and the company has pricing power due to its strong brand recognition. This has helped mitigate concerns about cost inflation.
• The company actively manages its brand and business portfolios through strategic acquisitions and divestments. For example, the acquisition of Valspar expanded their industrial product portfolio, while the divestment of the China architectural paint business was a strategic move given the challenges in the Chinese property market.
• Sherwin-Williams' performance is tied to the growth in residential repaints, property maintenance, and new residential projects. The softness in the new residential housing market can impact the company's volume growth.
• The company's financial health is reflected in its free cash flow, operating cash flow, and gross debt leverage. Sherwin-Williams' cash generation is strong, and they effectively manage their working capital and costs.
• Sherwin-Williams' stock price is influenced by broader market volatility and investor sentiment. The stock's price movement can be analysed using various technical indicators and market trends.
• The company's valuation can be assessed by comparing financial statements, analysing fundamental indicators, and examining the broader market conditions. This includes considering the industry's growth prospects and Sherwin-Williams' competitive position within it.
• Regulatory and geopolitical factors can also impact the company's performance. For example, changes in environmental regulations or trade policies may affect the cost of doing business.
• Broader economic trends, such as inflation and changes in consumer spending, can impact the demand for Sherwin-Williams' products.
• Sherwin-Williams' performance relative to its competitors and the overall market can provide insights into its ability to navigate economic conditions and market trends.

Risk factors and investment timing

When considering investing in Sherwin-Williams, it is important to assess the associated risks and evaluate the timing of your investment. Here are some key factors to consider:

• Market Risk: Sherwin-Williams stock is subject to systematic market risk, which means its price can be influenced by overall stock market movements. This risk cannot be diversified away and needs to be considered when investing.
• Company-Specific Risk: The stock also faces unsystematic or company-specific risk, which is related to events specific to Sherwin-Williams or its industry. Diversification can help mitigate this risk.
• Volatility: Sherwin-Williams has relatively low volatility compared to other stocks, with skewness of -0.3 and kurtosis of -0.17. Understanding volatility trends can help investors time the market effectively.
• Growth Prospects: Sherwin-Williams has strong growth prospects, with a projected earnings growth of 12.3% for the current fiscal year. This makes it an attractive option for growth investors.
• Analyst Recommendations: The stock has received a 'Hold' rating from Zacks, indicating an inline return relative to the market in the short term. However, it has a Growth Score of D, suggesting it may be fairly valued.
• Valuation: Sherwin-Williams' market value should be compared to its book value and intrinsic value to determine if it is overvalued or undervalued. Its price-to-book ratio and other valuation metrics can help in this assessment.
• Industry and Sector Performance: The performance of Sherwin-Williams' industry and sector should be considered. The company operates in the paints and related products industry, which currently ranks in the top 38% of Zacks-ranked industries.
• Economic Conditions: Broader economic conditions can impact the company's performance. Keep an eye on economic indicators and their potential effect on Sherwin-Williams' business.
• Risk Management: Sherwin-Williams' risk-adjusted performance and other financial metrics, such as Jensen Alpha and Treynor Ratio, can help assess the company's ability to manage risk and generate returns.
• Investment Horizon: Consider your investment horizon when deciding on the timing of your investment. Short-term investors may focus on different factors than long-term investors.

In conclusion, a comprehensive analysis of Sherwin-Williams' financial health, growth prospects, valuation, and industry positioning is essential for determining the right time to invest. It is also crucial to assess your risk tolerance and investment goals to make an informed decision.

Frequently asked questions