_edited.png)
RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
The Sherwin-Williams Company (XNYS:SHW) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
SHW
Name:
THE SHERWIN-WILLIAMS COMPANY (XNYS:SHW)
Sector:
- 80000.00K
Industry:
Specialty Chemicals
CEO:
Mr. John Morikis
Total Employees:
61,626
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -173.57% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF THE SHERWIN-WILLIAMS COMPANY(SHW) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SPECIALTY CHEMICALS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
231.81
One Month Price Target:
$233.18
Six Month Price Target :
$240.
Likely Price in One Year's Time:
Ticker:
$248.2
Likely Trading Range Today Under (Normal Volatility)
$231.1
Price Upper limit ($) :
$232.75
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$221.91
This week:
$209.67
This month :
$187.54
Other Primary facts
Market Cap:
59.19B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
259.18M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
14.45%
-18.68%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$277.74
$256.60
$185.88
$207.02
Medium risk (<10%) entry points
Buy Call
Sell Call
$249.72
Buy Put:
Sell Put:
$245.21
$213.84
$218.41
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
SHW
Sharpe Ratio:
1.95%
Comparison:
SHW, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is -7.96% lower than the industry
& is -14.46% lower than the market/S&P 500 average
Average Returns/Yield of
SHW
Daily returns:
0.05%
Weekly returns:
0.25%
Monthly returns:
1.00%
Yearly returns:
24.57%
Comparison of returns:
Average annual returns/yield (last 3 years) is -51.29% below industry average
Classification:
SHW, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.87
Statistical test of Returns:
SHW has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.10%
Weekly Volatility:
4.70%
Monthly Volatility:
9.41%
Yearly Volatility:
32.59%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.72%
Volatility in last five trading days has been -65.91% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.27%
Weekly VaR:
-9.55%
Monthly VaR:
-19.10%
How Much Can the price of
SHW
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-16%
Worst case (decline):
-66.16%
This translates to price declining to:
$193.98
This translates to price declining to:
$78.44
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
SHW is a 34.80% riskier investment compared to the market/S&P 500 & is 15.48% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -37.41% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
SHW
Beta in relation to market/S&P 500--1.05
Expected beta in 1 year's time:
0.775
Expected beta in 3 year's time:
1.096
Unlevered (debt free) Beta:
0.222
Beta in relation to Nasdaq (XNAS):
0.694
Beta in relation to all global stocks::
0.753
Beta Comparison & Analysis
Beta of competitors/peers::
1.09
Beta is -3.47% lower than peers
Average Industry Beta:
1.164
Beta is -9.65% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
46.81%
Sustainable growth rate is 62.02% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.016
Alpha is -88.01% below industry average alpha yield
Alpha is 103% higher than market/& is unsustainably high
Analysis of Cost of Capital of
SHW
Equity cost of capital:
0.104
Equity cost of capital is -6.92% below industry mean WACC
Unlevered (without debt) cost of capital:
2.18%
Before-tax cost of debt:
2.72%
After-tax cost of debt:
2.15%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.15%
WACC is -32.48% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$78.27
Revenue growth rate per share of (3Y):
26.89
Annual revenue growth rate is 1132.95% above the industry average
EPS:
$6.87
Expected Annual growth rate of EPS (3Y):
7.64%
Expected future EPS growth rate is 742.77% higher than the Specialty Chemicals industry
Free cash flow (FCF) per share:
$6.11
Balance sheet equity growth per share: 93.21%
Equity growth rate per share is 791.57% higher than the industry
Debt per share
$38.87
EBITDA per share
$12.01
Valuation Analysis Today of
SHW
P/E Ratio:
34.85
P/E Ratio of Competitors/Peers:
15.78
P/E ratio is 120.89% higher than main peers & is -6.96% lower than the industry
Stock price/value with industry average P/E ratio: $257.34
SHW is -9.92% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $28.23
Present value of the expected future dividends only: $18.95
P/S (Price to Sales ratio):
2.96
Price to sales ratio is 7.33% above the industry mean
P/B (Price to book value ratio):
26.89
Price to free cash flow: 37.94
Price to free cash flow ratio is -2.19% lower than the industry
Net income growth rate (3Y):
78.71%
Net income growth rate is -242.37% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 8.27%
Dividend yeild: 0.99%
Previous Dividend: $0.60
Previous adjusted dividend: $0.60
Previous Dividend: $2.30
Expected next dividend best case: $0.96
Expected next dividend worst case: $0.24
Average dividend payment (long-term): $1.00
Average dividend increase/decrease (growth rate) % per period: -1.59%
Expected next dividend payment date: 09/01/2022
Expected next dividend record date: 18/08/2022
Expected next dividend declaration date: 19/07/2022
Previous dividend payment date: 06/03/2022
Previous dividend record date: 20/05/2022
Previous dividend declaration date: 20/04/2022
Dividend History:
2022-05-19--$0.60
2021-11-18--$0.55
2021-05-20--$0.55
2022-02-25--$0.60
2021-08-19--$0.55
2021-02-26--$0.55
Dividend growth rate is -107.74% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
450.86%
Net debt to equity ratio:
541.06%
Debt to assets ratio:
46.36%
Net debt to assets ratio:
55.63%
Debt-to-asset ratio is -14.32% below industry average
Ability to repay debt:
Interest coverage ratio:
9.16
Interest coverage ratio is -56.46% less than industry average
Looking forward:
Debt growth rate:
13.66%
Annual debt growth is -96% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.66
Statistical significance of correlation:
SHW has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.58
Stock price is 13.92% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.58
Correlation of price movement with Nasdaq (^IXIC):
0
Covariance of price movement with the market:
0
Kurtosis
14.502
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-0.42
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
SHW
Gross Profit Margin Ratio:
167%
Operating Profit Margin Ratio:
12.46%
Operating profit margin is -104.42% lower than the industry
Net Profit Margin Ratio:
167%
Effective Tax Rate:
17.04%
Effective tax rate is -5.08% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
81.71%
Return on equity (ROE) is 184.24% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
8.40%
Return on assets (ROA) is 219.91% higher than the industry
Financial Leverage:
1.9x
Current Ratio:
0.88
Current ratio is -67.35% below industry average
Cash Conversion Cycle (days):
-18.7
Cash conversion cycle is -130.24% below industry average
The remaining useful life of property plant & equipment is: 2.7 years
Stock based compensation to net income ratio:
1.47%
In-depth Efficiency Analysis
Revenue generated per employee:
329.2K
Each employee generates -56% less revenue than industry average revenue per employee
EBITDA generated per employee:
50.5K
Each employee generates -49% less EBITDA than industry average revenue per employee
Profit generated per employee:
29.6K
Each employee generates -7% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 1.3K
Each employee generates -97% less free cash flow than industry average revenue per employee
Assets/Capital per employee
253.9K
Each employee generates -97% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
SHW
CTA-PB
Vale SA (XNYS:VALE)
AIR PRODUCTS AND CHEMICALS, INC. (XNYS:APD)
FREEPORT-MCMORAN INC. (XNYS:FCX)
RIO TINTO PLC (XNYS:RIO)
SOUTHERN COPPER CORPORATION (XNYS:SCCO)
NEWMONT CORPORATION (XNYS:NEM)
Dow Inc. (XNYS:DOW)
DuPont de Nemours, Inc. (XNYS:DD)
Current Analyst Ratings
Strong buy�33%
Buy�33%
Hold�29%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
20.29B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
11.80B
8.48B
-
-
5.65B
-
302.40M
5.96B
5.20M
339.90M
571.50M
3.11B
2.53B
1.83B
2.20B
375.10M
1.83B
Statement of Cash Flow
Date:
Period:
143.50M
Differed Income Tax :
- 11600.00K
Stock Based Compensation :
26.80M
Change in Working Capital :
- 608600.00K
Accounts Receivables:
-
Other Working Capital:
- 498200.00K
Other Non-Cash Items:
105.40M
Net Cash Provided by Operating Activities:
26.30M
Investments in PP&E:
-
Net Acquisitions:
- 400.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
401.10M
-
401.10M
2.78B
2.33B
573.10M
6.09B
3.75B
7.06B
4.00B
-
-
836.00M
15.64B
-
21.73B
2.86B
2.42B
178.20M
-
1.68B
6.95B
10.07B
1.71B
12.54B
-
19.50B
91.00M
2.34B
- 742000.0K
-
March 31, 2022 at 6:00:00 AM
17.76B
2.23B
21.73B
-
12.49B
12.1B
-
- 195200.00K
- 195600.00K
-
22.00M
- 407100.00K
- 150900.00K
951.70M
415.70M
- 11000.00K
235.40M
401.10M
165.70M
26.30M
- 106300.00K
- 80000.00K
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
SHW
2023
2024
2025
2026
2027
$248.72
$266.30
$285.13
$305.29
$326.87