Sherwin-Williams
SHW
$346.59
-0.09%
The Sherwin-Williams Company is the largest global manufacturer of paints and coatings, operating through three primary segments: Paint Stores Group, Consumer Brands Group, and Performance Coatings Group. With over 4,800 company-owned stores and a strong brand presence, Sherwin-Williams holds a dominant position in the architectural paints market, serving professional painters, contractors, and DIY consumers. The current investor narrative centers on the company's ability to sustain growth amid a challenging macroeconomic environment, with recent quarterly results showing a 6.8% YoY revenue increase and a 2.18 EPS beat, while analysts debate the impact of raw material costs and housing market trends on future margins.…
SHW
Sherwin-Williams
$346.59
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Investment Opinion: Should I buy SHW Today?
Based on the analysis, I rate SHW as a Hold. The stock offers a solid business with strong brand and market position, but the current valuation at 31.22x trailing PE and 26.4x forward PE leaves limited upside to the average analyst target of $390.10 (8.6% upside). The consensus is 'Buy', but the wide target range and mixed analyst actions suggest caution. The thesis is that SHW is a quality compounder, but the premium valuation and cyclical risks warrant a neutral stance.
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SHW 12-Month Price Forecast
The AI assessment is neutral with medium confidence. The company shows solid operational performance with revenue growth and margin expansion, but the valuation is rich relative to peers. The analyst consensus is positive, but the wide target range and mixed actions (e.g., UBS downgrade) introduce uncertainty. The stock's recent momentum is encouraging, but the 1-year underperformance vs. S&P 500 (-22.14% relative strength) suggests lingering concerns. To upgrade to bullish, we would need to see sustained revenue growth above 7%, margin expansion, and a narrowing of the valuation premium. A downgrade to bearish would occur if revenue growth decelerates below 4% or gross margin falls below 47%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Sherwin-Williams's 12-month outlook, with a consensus price target around $390.57 and implied upside of +12.7% versus the current price.
Average Target
$390.57
0 analysts
Implied Upside
+12.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$340 - $420
Analyst target range
The stock is covered by 21 analysts, with a consensus recommendation of 'Buy' and a mean rating of 2.0 (where 1 is Strong Buy and 5 is Sell). The average target price is $390.10, implying an upside of 8.6% from the current price of $359.10. The distribution of ratings is not provided, but the mean rating of 2.0 suggests a bullish tilt, with most analysts likely rating it as Buy or Outperform. The target price range is $340.00 to $420.00, with the low target implying a downside of -5.3% and the high target implying an upside of 17.0%. The wide spread of $80 indicates significant uncertainty about the stock's future performance, possibly due to cyclicality in the housing market and raw material costs. Recent institutional actions show a mix of ratings, with RBC Capital and BMO Capital maintaining Outperform, Citigroup reiterating Buy, and UBS downgrading from Buy to Neutral in June 2026, suggesting some divergence in sentiment. The high target of $420 likely assumes continued market share gains and margin expansion, while the low target of $340 may reflect concerns about a housing downturn or increased competition. Overall, the consensus leans bullish, but the wide range highlights the risks involved.
Bulls vs Bears: SHW Investment Factors
Sherwin-Williams presents a balanced but slightly bullish case. The bull case is supported by accelerating revenue growth, margin expansion, strong analyst consensus, and recent price momentum. However, the bear case highlights a premium valuation, high debt, and sensitivity to cyclical factors. The most important tension is whether the company can sustain its growth and margin improvements to justify the premium valuation. If revenue growth continues at 6-7% and margins hold, the stock could re-rate higher; if the housing market weakens or costs rise, the premium could compress. Currently, the evidence slightly favors the bulls, given the strong operational performance and positive analyst sentiment, but the valuation leaves limited margin of safety.
Bullish
- Revenue growth reaccelerating: Q1 2026 revenue grew 6.8% YoY to $5.67B, the strongest growth in recent quarters, signaling a return to expansion after a period of stagnation. This acceleration is driven by the Paint Stores Group, which contributed $3.05B, and suggests improving demand in the architectural paints market.
- Margin expansion and profitability: Gross margin improved to 49.07% in Q1 2026 from 48.23% a year ago, while operating margin ticked up to 14.31%. Net income rose 6.1% YoY to $534.7M, and ROE is exceptionally high at 55.86%, reflecting efficient use of equity and strong pricing power.
- Strong analyst consensus and upside: With 21 analysts, the consensus is 'Buy' (mean rating 2.0), and the average target price of $390.10 implies 8.6% upside from the current price of $359.10. The high target of $420 suggests 17% upside, indicating that analysts see further appreciation potential.
- Recent price momentum and relative strength: The stock has rallied 8.07% over the past month and 19.66% over the past three months, outperforming the S&P 500 by 5.22 and 14.63 percentage points, respectively. This momentum suggests improving investor sentiment and a potential trend reversal from the earlier drawdown.
Bearish
- Premium valuation vs. peers: The trailing PE of 31.22x is 42% above the industry average of 22x, and the PS ratio of 3.39x is above the industry average of 2.5x. This premium valuation leaves little room for error; any disappointment in earnings could trigger multiple compression.
- High debt and liquidity concerns: The debt-to-equity ratio is 2.81, and the current ratio is 0.87, indicating potential liquidity stress. While typical for the industry, the high leverage amplifies financial risk, especially if interest rates remain elevated or cash flows weaken.
- Weak free cash flow in Q1: Free cash flow in Q1 2026 was just $0.8 million, a sharp drop from $862.1 million in Q4 2025, due to significant working capital outflows. Although TTM FCF is $2.91B, the quarterly volatility could raise concerns about cash generation consistency.
- Sensitivity to housing market and raw materials: The company's performance is closely tied to the housing market and construction activity. A downturn in housing starts or a spike in raw material costs could pressure margins and revenue, as seen in the 1-year price change of -1.77% despite market gains.
SHW Technical Analysis
The stock is currently in a recovery phase after a significant drawdown, with the 1-year price change at -1.77% and the current price of $359.10 sitting at 78.6% of its 52-week range (between $289.86 low and $379.65 high). This positioning suggests the stock has rebounded from its lows but remains below its highs, indicating a potential value opportunity if the recovery continues, though it may face resistance near the upper end of its range. The 6-month price change of -2.65% reflects the earlier decline, but the recent momentum has been strong, with a 1-month change of +8.07% and a 3-month change of +19.66%, showing a clear acceleration in buying interest. This short-term strength contrasts with the longer-term flat performance, suggesting a possible trend reversal rather than a mere bounce, especially as the stock has outperformed the S&P 500 by 5.22 percentage points over the past month. The 52-week low of $289.86 provides strong support, while the 52-week high of $379.65 acts as a key resistance level; a breakout above this level would signal a resumption of the long-term uptrend, while a breakdown below support could indicate further downside. With a beta of 1.093, the stock is only slightly more volatile than the market, making it a relatively stable investment for its sector, and the recent volume of 1.12 million shares suggests active trading interest.
Beta
1.09
1.09x market volatility
Max Drawdown
-21.9%
Largest decline past year
52-Week Range
$290-$380
Price range past year
Annual Return
-4.7%
Cumulative gain past year
| Period | SHW Return | S&P 500 |
|---|---|---|
| 1m | +8.3% | +2.5% |
| 3m | +12.1% | +2.7% |
| 6m | -3.9% | +11.1% |
| 1y | -4.7% | +20.5% |
| ytd | +5.7% | +12.3% |
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SHW Fundamental Analysis
Revenue for the most recent quarter (Q1 2026) was $5.67 billion, up 6.81% YoY from $5.31 billion in Q1 2025, marking a return to growth after a period of stagnation. The multi-quarter trend shows revenue fluctuating between $5.30 billion and $6.36 billion over the past year, with the latest quarter showing the strongest YoY growth, indicating a potential acceleration. Segment-wise, the Paint Stores Group contributed $3.05 billion, the Consumer Brands Group $2.19 billion, and the Performance Coatings Group $1.72 billion, with the Paint Stores Group being the primary growth driver. Net income for Q1 2026 was $534.7 million, up from $503.9 million in the prior year quarter, reflecting a 6.1% increase, while gross margin improved to 49.07% from 48.23% a year ago, indicating solid cost management. Operating margin came in at 14.31%, slightly up from 14.22% in Q1 2025, and net margin was 9.44%, up from 9.50% (a slight decline), but overall profitability remains healthy. The company's balance sheet shows a debt-to-equity ratio of 2.81, which is high but typical for the industry, and a current ratio of 0.87, indicating potential liquidity concerns. Free cash flow for the quarter was just $0.8 million, a sharp drop from $862.1 million in Q4 2025, due to a significant working capital outflow, but trailing twelve-month free cash flow stands at $2.91 billion, providing adequate coverage for dividends and capex. ROE is exceptionally strong at 55.86%, reflecting high leverage and efficient use of equity, while ROA is 9.52%, indicating solid asset productivity.
Quarterly Revenue
$5.7B
2026-03
Revenue YoY Growth
+6.8%
YoY Comparison
Gross Margin
49.1%
Latest Quarter
Free Cash Flow
$2.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is SHW Overvalued?
Given that net income is positive, the primary valuation metric selected is the PE ratio. The trailing PE is 31.22x, while the forward PE is 26.40x, implying that the market expects earnings growth of about 18% over the next year, which is optimistic given the recent growth rates. The gap between trailing and forward PE suggests the market is pricing in a significant acceleration in earnings, which may be justified by the company's strong brand and market position. Compared to the industry average PE of 22x (based on available data), Sherwin-Williams trades at a 42% premium, reflecting its status as a market leader with superior margins and growth prospects. The PS ratio of 3.39x is also above the industry average of 2.5x, further indicating a premium valuation. Historically, the stock's PE has ranged from 19x to 75x over the past five years, with the current 31.22x sitting near the middle of that range. This suggests that the stock is not excessively overvalued relative to its own history, but it is not cheap either. The PEG ratio is negative at -11.11, which is not meaningful due to negative earnings growth expectations, but the forward PE of 26.4x implies a PEG of around 1.6 if earnings grow at 16%, which is reasonable for a quality compounder.
PE
31.2x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 19x~56x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
21.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are notable. The company carries a high debt-to-equity ratio of 2.81, which amplifies financial risk, especially if interest rates remain elevated. The current ratio of 0.87 indicates potential liquidity concerns, and the sharp drop in quarterly free cash flow to $0.8 million in Q1 2026 from $862.1 million in Q4 2025 highlights cash flow volatility. Revenue concentration in the Paint Stores Group (54% of total) exposes the company to regional housing market fluctuations. Additionally, the forward PE of 26.4x implies the market expects ~18% earnings growth, which may be optimistic given the recent growth rate of 6.8% revenue and 6.1% net income growth.
FAQ
The key risks are: 1) Financial risk from high debt (D/E of 2.81) and low current ratio (0.87), which could strain liquidity if cash flows weaken. 2) Market risk from a housing downturn, which would reduce demand for architectural paints; the stock's beta of 1.093 indicates moderate market sensitivity. 3) Competitive risk from lower-cost rivals and pricing pressure, which could erode margins. 4) Valuation risk: if earnings growth disappoints, the premium PE could compress, leading to a decline toward the 52-week low of $289.86, a potential -19% downside from the current price.
The 12-month forecast is moderately positive. The base case (50% probability) sees the stock trading around $390, the average analyst target, implying 8.6% upside. The bull case (30% probability) targets $420, a 17% gain, if growth accelerates. The bear case (20% probability) sees the stock falling to $340 or lower, a -5% to -19% decline, if the housing market weakens. The most likely scenario is the base case, assuming revenue growth of 6-7% and stable margins. Overall, the stock is expected to provide modest returns with moderate risk.
SHW is trading at a premium to its peers, with a trailing PE of 31.22x versus the industry average of 22x, and a PS ratio of 3.39x versus 2.5x. This premium reflects the market's expectation of continued growth and superior margins. Historically, the PE has ranged from 19x to 75x over the past five years, so the current level is near the middle. The forward PE of 26.4x implies the market expects ~18% earnings growth, which is optimistic given recent growth rates. Overall, the stock is fairly valued to slightly overvalued, with the premium justified by its market leadership and profitability.
SHW is a good stock to buy for investors with a long-term horizon who value quality and are willing to pay a premium. The stock offers a 8.6% upside to the average analyst target of $390.10, and the consensus is 'Buy'. However, the trailing PE of 31.22x is above the industry average, and the stock is sensitive to housing market cycles. If you believe in the company's ability to grow earnings at 16%+ and maintain margins, it could be a solid addition. But for value investors, the premium valuation may be a deterrent. It's a 'Hold' for now, but a good buy on dips below $330.
SHW is better suited for long-term investment due to its stable business model, consistent dividend growth (47 years of increases), and strong market position. The stock's beta of 1.093 indicates moderate volatility, but the 1-year price change of -1.77% shows it can be range-bound. Short-term trading is possible given the recent momentum, but the premium valuation and cyclicality make it risky for short-term plays. A minimum holding period of 3-5 years is recommended to ride out housing market cycles and benefit from earnings growth. The dividend yield of 0.99% provides a modest income cushion while waiting for capital appreciation.