Sherwin Williams
NYSE: SHW
$317.53 ▲ +6.99  (+2.25%)
At close: Jul 24, 2026 · 3:59 PM UTC
Financial Ratios
Market Cap78.17 Bn
P/E30.07
P/S3.27
Div. Yield0.01
ROIC (Qtr)0.01
Total Debt (Qtr)11.70 Bn
Revenue Growth (1y) (Qtr)6.81
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About

The Sherwin-Williams Company founded in 1866 and incorporated in Ohio in 1884 is engaged in the development manufacture distribution and sale of paint coatings and related products to professional industrial commercial and retail customers primarily in North and South America with additional operations in the Caribbean region Europe Asia and Australia. The company generates revenue by selling paint coatings and related products through its stores and distribution channels…

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Sector: Basic Materials Industry: Specialty Chemicals CIK: 0000089800

Investment Thesis

▲ Bull case
  • Sherwin-Williams has demonstrated resilience in a challenging macro environment by consistently delivering share gains across key segments, driven by operational execution rather than market tailwinds, as evidenced by mid single-digit growth in Paint Stores Group despite flat-to-down residential repaint demand and double-digit expansion in protective and marine coatings for seven consecutive quarters, indicating that the company's disciplined new account focus and value-based selling are creating sustainable competitive advantages that are underappreciated by the market.
  • The company's strategic response to raw material inflation—characterized by surgical, customer-specific pricing adjustments and a strong reliance on North American-sourced inputs (over 80% of sales) and contractual buying arrangements—provides a structural hedge against commodity volatility, allowing Sherwin-Williams to mitigate margin pressure more effectively than peers who rely on broader, across-the-board increases, a dynamic management emphasized but did not fully quantify in guidance, suggesting upside to earnings resilience if cost pass-through continues to outperform expectations.
  • Despite the terminated joint bid for AkzoNobel, the news revealed Sherwin-Williams' active pursuit of transformative M&A opportunities in high-value industrial coatings segments, particularly marine, protective, automotive, and specialty coatings, which would complement its existing Performance Coatings Group and unlock premium growth avenues in markets where it currently has limited presence, representing a quiet but significant strategic optionality that the market has not priced in following the public withdrawal of the proposal.
  • Sherwin-Williams' ongoing store portfolio optimization—opening 21 new stores while closing 27 in Q1, with plans for 80–100 net new openings annually—combined with its focus on return on net assets employed, is driving improved capital efficiency and long-term profitability, yet the market appears to view this as routine maintenance rather than a deliberate, multi-year initiative to enhance asset productivity in a low-growth environment, underestimating the compounding effect of these incremental gains on ROIC and free cash flow generation.
  • The company's innovation pipeline, exemplified by products like Emerald Symmetry—a zero-VOC, plant-based interior coating improving job site productivity and contractor efficiency—is creating tangible value beyond traditional paint performance, enabling share gains in residential repaint by addressing contractor pain points around cycle time and touch-up, a differentiator that is not fully captured in standard volume or pricing metrics but is critical to winning business in a share-constrained environment.
▼ Bear case
  • Sherwin-Williams' full-year guidance assumes volume will remain flat to slightly negative despite pricing power, yet the company acknowledged that consumer sentiment is at levels worse than during the Global Financial Crisis and COVID-19, signaling a potential for deeper demand destruction than modeled, particularly in discretionary end markets like residential repaint and DIY, where volume declines could accelerate if macroeconomic weakness persists, undermining the earnings resilience thesis built on pricing offsets.
  • While management highlighted that over 80% of sales are North America-based and insulated from Strait of Hormuz-related supply disruptions, the remaining 20% of revenue—particularly in Asia Pacific and EMEA—is exposed to escalating raw material inflation from solvent and resin-based commodities like propylene, which is forecasted to rise up to 50% through the rest of 2026, and the company's admission that these costs will impact the P&L more materially in the second half of the year introduces a significant second-half margin risk that is not fully reflected in current guidance.
  • The company's reliance on cost-out actions and operational efficiency to offset volume pressure, while historically effective, faces diminishing returns as SG&A increased mid single-digit in Q1 despite efforts to control it, and the acknowledgment that incentive compensation and foreign exchange headwinds are driving SG&A higher—particularly in Performance Coatings Group—suggests that operating leverage may be breaking down, raising concerns about the sustainability of margin expansion if top-line growth remains tepid.
  • Sherwin-Williams' store portfolio strategy, while framed as disciplined optimization, involves closing nearly half a% of stores quarterly (27 closures in Q1), and though new openings are planned, the net growth is minimal; in a period of structural demand softness in architectural paint, this approach risks overextending the physical footprint without sufficient customer density to support profitability, potentially leading to long-term drag on store-level economics and return on invested capital.
  • Despite strong performance in niche segments like automotive refinish and packaging, the company's overall growth remains dependent on share gains in a contracting or stagnant market, as explicitly stated by management, and with no meaningful recovery expected in most end markets, the sustainability of outperformance hinges on continuously taking share from competitors—a strategy that becomes increasingly difficult and costly as market consolidation intensifies and rivals respond with their own pricing and innovation initiatives, creating a competitive treadmill that may erode long-term profitability.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer Comparison

Companies in the Specialty Chemicals
S.No. Ticker Company Market CapP/EP/STotal Debt (Qtr)
1 LIN Linde Plc 237.95 Bn33.526.8724.68 Bn
2 SHW Sherwin Williams Co 78.17 Bn30.073.2711.70 Bn
3 ECL Ecolab Inc. 76.02 Bn30.014.738.24 Bn
4 APD Air Products & Chemicals, Inc. 66.38 Bn47.145.3317.40 Bn
5 PPG Ppg Industries Inc 26.02 Bn3,717.411.617.83 Bn
6 LYB LyondellBasell Industries N.V. 22.51 Bn-28.530.7611.45 Bn
7 SQM Chemical & Mining Co Of Chile Inc 19.70 Bn21.773.724.79 Bn
8 IFF International Flavors & Fragrances Inc 19.51 Bn-102.161.815.82 Bn