SHERWIN WILLIAMS CO (SHW) Stock Analysis
SHERWIN WILLIAMS CO (SHW) Stock Analysis
Analysis from 10-Q filed 2025-10-28. Data as of Q4 2025.
Overall Grade: F (Concerning)
SHERWIN WILLIAMS CO faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 18.8% | Solid returns |
| FCF Margin | 11.3% | Healthy cash flow |
| Debt/Equity | 2.4x | Elevated debt |
Investment Thesis: Strong return on invested capital of 18.8% suggests durable competitive advantages and efficient capital allocation.
Explore SHERWIN WILLIAMS CO: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: SHERWIN WILLIAMS CO earns 18.8% ROIC, Top 25% in Consumer Discretionary
SHERWIN WILLIAMS CO's trailing-twelve-month ROIC of 18.8% ranks Top 25% in Consumer Discretionary companies (sector median: 8.8%), driven by NOPAT margin of 12.5% combined with asset turnover of 0.9x. Source: 10-Q filed 2025-10-28. Gross margin of 48.8% with operating margin at 16.2% reflects strong pricing power.
| Metric | SHW | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 18.8% | Good | Above sector median of 8.8% |
| Return on Equity (ROE) | 59.5% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 48.8% | Good | Strong pricing power |
| Operating Margin | 16.2% | Good | Efficient operations |
Cash Flow: SHERWIN WILLIAMS CO generates $2.7B FCF at 11.3% margin, positive NaN/8 quarters
SHERWIN WILLIAMS CO generated $2.7B in free cash flow (TTM), a 11.3% FCF margin, a margin that ranks Top 10% in Consumer Discretionary. Operating cash flow exceeds net income by 1.3x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-10-28.
| Metric | SHW | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 11.3% | Good | Healthy cash generation |
| Free Cash Flow (TTM) | $2.7B | Good | Positive cash generation |
| OCF/Net Income | 1.3x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: SHERWIN WILLIAMS CO at 2.4x leverage
SHERWIN WILLIAMS CO's debt-to-equity ratio of 2.4x reflects high leverage. Total debt of $10.9B offset by $207.2M in cash. Source: 10-Q filed 2025-10-28.
| Metric | SHW | Rating | Context |
|---|---|---|---|
| Debt to Equity | 2.4x | Warning | Elevated leverage |
| Net Cash Position | $-10.7B | Warning | Net debt position |
Valuation: SHERWIN WILLIAMS CO trades at 31.2x earnings
SHERWIN WILLIAMS CO trades at a P/E of 31.2x. Free cash flow yield of 3.3% reflects market expectations for growth.
| Metric | SHW | Rating | Context |
|---|---|---|---|
| P/E Ratio | 31.2x | Adequate | Premium valuation |
| EV/Sales | 3.9x | Good | Growth premium priced in |
| FCF Yield | 3.3% | Adequate | Lower cash yield |
| Dividend Yield | 1.0% | Adequate | Growth focus over income |
Capital Allocation: SHERWIN WILLIAMS CO returns 3.0% shareholder yield
SHERWIN WILLIAMS CO's total shareholder yield is 3.0% (dividends 1.0% + buybacks 2.1%). Source: 10-Q filed 2025-10-28.
| Metric | SHW | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 3.0% | Good | Dividend + buyback yield combined |
| Buyback Yield | 2.1% | Adequate | Active share repurchases |
| Total Capital Returned (TTM) | $2.4B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 18.8% | Top 25% | 2.1x above |
| Free Cash Flow Margin | 11.3% | Top 10% | 4.2x above |
| Gross Margin | 48.8% | Top 50% | 1.2x above |
| Operating Margin | 16.2% | Top 25% | 3.5x above |
| Return on Equity (ROE) | 59.5% | Top 5% | 5.6x above |
| P/E Ratio | 31.2x | N/A | - |
Financial Scorecard
| Metric | SHW | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 18.8% | Good | Top 25% of sector (median: 8.8%) |
| Free Cash Flow Margin | 11.3% | Good | Top 10% of sector (median: 2.7%) |
| Gross Margin | 48.8% | Good | Top 50% of sector (median: 39.5%) |
| Debt to Equity Ratio | 236.4% | Warning | High financial leverage |
| P/E Ratio (Price-to-Earnings) | 31.2x | Adequate | Growth premium |
| Free Cash Flow Yield | 3.3% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is SHERWIN WILLIAMS CO's Return on Invested Capital (ROIC)?
SHERWIN WILLIAMS CO (SHW) has a trailing twelve-month Return on Invested Capital (ROIC) of 18.8%. This compares above the sector median of 8.8%. An ROIC between 12-20% indicates solid capital allocation and sustainable competitive position.
Q: What is SHERWIN WILLIAMS CO's Free Cash Flow Margin?
SHERWIN WILLIAMS CO (SHW) has a free cash flow margin of 11.3%, generating $2.7 billion in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is SHERWIN WILLIAMS CO stock overvalued or undervalued?
SHERWIN WILLIAMS CO (SHW) trades at a P/E ratio of 31.2x, which is above the sector median of N/A. The EV/Sales multiple is 3.9x. Free cash flow yield is 3.3%, which is in line with market averages.
Q: Does SHERWIN WILLIAMS CO pay a dividend?
SHERWIN WILLIAMS CO (SHW) currently pays a dividend yield of 1.0%. Including share buybacks, the total shareholder yield is 3.0%. The relatively low yield suggests the company prioritizes growth reinvestment over income distribution.
Q: How much debt does SHERWIN WILLIAMS CO have?
SHERWIN WILLIAMS CO (SHW) has a debt-to-equity ratio of 2.4x with total debt of $10.9 billion. Net debt position is $10.7 billion.
Q: What is SHERWIN WILLIAMS CO's revenue and earnings growth?
SHERWIN WILLIAMS CO (SHW) grew revenue by 29.1% year-over-year. Earnings per share decreased by 2.7% compared to the prior year. Double-digit revenue growth indicates strong demand and market share gains.
Q: Is SHERWIN WILLIAMS CO buying back stock?
SHERWIN WILLIAMS CO (SHW) repurchased $1.7 billion of stock over the trailing twelve months. This represents a buyback yield of 2.1%.
Q: How does SHERWIN WILLIAMS CO compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, SHERWIN WILLIAMS CO (SHW) shows: ROIC of 18.8% is above the sector median of 8.8% (Top 21%). FCF margin of 11.3% exceeds the sector median of 2.7% (Top 10% of sector). Gross margin at 48.8% is 9.3 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with SHERWIN WILLIAMS CO?
Investors in SHERWIN WILLIAMS CO (SHW) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. 2) Debt-to-equity of 2.4x is elevated. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-28. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.