Sherwin-Williams Co

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SHW : NYSE : Basic Materials
$281.52 up 1.20 | 0.43%
Today's Range: 278.50 - 282.76
Avg. Daily Volume: 717,700
09/27/16 - 2:12 PM ET

Financial Analysis


SHERWIN-WILLIAMS CO's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. SHERWIN-WILLIAMS CO has weak liquidity. Currently, the Quick Ratio is 0.71 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

At the same time, stockholders' equity ("net worth") has greatly increased by 64.60% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)3219.533132.14
EBITDA ($mil)636.47579.66
EBIT ($mil)586.42530.76
Net Income ($mil)378.06349.94


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)402.6675.07
Total Assets ($mil)6665.686134.66
Total Debt ($mil)1970.62285.22
Equity ($mil)1246.63757.34


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin52.3650.41
EBITDA Margin19.7618.5
Operating Margin18.2116.95
Sales Turnover1.731.84
Return on Assets16.7315.32
Return on Equity89.47124.16
Debt Q2 FY16 Q2 FY15
Current Ratio1.330.9
Debt/Capital0.610.75
Interest Expense40.8812.89
Interest Coverage14.3541.19


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)92.2293.21
Div / share0.840.67
EPS3.993.7
Book value / share13.528.13
Institutional Own % n/a n/a
Avg Daily Volume732240.0693102.0

Valuation


BUY. SHERWIN-WILLIAMS CO's P/E ratio indicates a discount compared to an average of 24.75 for the Chemicals industry and a value on par with the S&P 500 average of 25.19. For additional comparison, its price-to-book ratio of 20.69 indicates a significant premium versus the S&P 500 average of 2.82 and a significant premium versus the industry average of 5.71. The current price-to-sales ratio is above the S&P 500 average, but below the industry average. The valuation analysis reveals that, SHERWIN-WILLIAMS CO seems to be trading at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
SHW 23.60 Peers 24.75   SHW 16.00 Peers 15.78

Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation.

SHW is trading at a valuation on par with its peers.

 

Average. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

SHW is trading at a valuation on par to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
SHW 20.06 Peers 20.26   SHW 1.83 Peers 1.89

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

SHW is trading at a valuation on par with its peers.

 

Average. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

SHW trades at a valuation on par to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
SHW 20.69 Peers 5.71   SHW 20.91 Peers 93.43

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

SHW is trading at a significant premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, SHW is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
SHW 2.23 Peers 2.31   SHW 2.19 Peers -7.33

Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

SHW is trading at a valuation on par with its industry on this measurement.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

SHW has a sales growth rate that significantly exceeds its peers.

 

 

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