This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Sherwin-Williams Paints the Town Green


Given that the business performed well and the company remained committed to continuously rewarding shareholders, it follows that the performance results over this time are likely quite good. And this is precisely what we see. Over the past 15 years, Sherwin-Williams has returned almost 18% a year, against the 2.6% annual returns of the S&P 500 index over the same time period. A hypothetical $10,000 investment in Sherwin-Williams on Dec. 31, 1999, would now be worth $100,000 today -- 10 times the initial investment.


It is clear that this has been relatively exceptional performance. Yet what is not yet readily apparent is that a portion of these results are directly a result of price-to-earnings expansion. More specifically, Sherwin-Williams traded at about 11.6 times earnings at the end of 1999 as compared to 25 times earnings today. This also can be observed in the capital appreciation component of the return. While the business generated operating results of 11.5% a year, the stock price grew by 17.2% a year.

If we add price (the black line) to the FAST Graphs -- thus making it an earnings and price correlated graph -- we can see this relationship develop over time. For a long time Sherwin-Williams traded slightly below 15 times earnings (the orange line). Indeed, the "normal" P/E ratio for the last 15 years has been about 15.5. However, in the past 2 years the market has commanded a much higher valuation, rocketing shares past their normal valuation range.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
SHW $289.24 1.20%
AAPL $126.39 -1.70%
FB $81.17 0.34%
GOOG $574.64 0.22%
TSLA $200.72 -0.85%

Markets

DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs