Value
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.4 |
| P/S | 8.1 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.3 |
| PEG | 4.1 |
| Analyst target | 6.0 |
- ▸Forward P/E: 23.9x
- ▸PEG: 2.40
SHW · Why this verdict
Why Sherwin-Williams Company (The) (SHW) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score5.4/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Sherwin-Williams demonstrates exceptional return on equity of 61% and has beaten earnings estimates in 3 of the last 4 quarters, but heavy debt leverage of 3.3x debt-to-equity, thin upside of only 4.8%, and a confirmed downtrend make the current risk-reward unattractive for new positions.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Sherwin-Williams generates a 61% return on equity, ranking it at the top of its specialty chemicals peer group on quality metrics and demonstrating a durable ability to compound capital for shareholders. Quality breakdown | Return on equity remains above 50% over the next 12 months, confirming the business earns well above its cost of capital. | →Stable |
| CounterElevated return on equity is partly a function of high financial leverage at 3.3x debt-to-equity, which could reverse into a liability if credit conditions tighten or revenue softens. | ||
The company has beaten consensus earnings per share estimates in 3 of the last 4 quarters with an average positive surprise, demonstrating consistent delivery against analyst expectations. Earnings | Earnings beats continue in at least 3 of the next 4 quarters with average surprise above 2%. | →Stable |
| CounterThe one miss in the last four quarters came with an 11.2% negative surprise, suggesting occasional quarter-to-quarter volatility that could return. | ||
With a debt-to-equity ratio of 3.3x, Sherwin-Williams carries above-average financial leverage for the specialty chemicals industry, which the scoring engine penalizes and which limits financial flexibility during downturns. Bear case | Debt-to-equity ratio declines to below 2.5x within 12 months through earnings-driven debt reduction. | ↓Deteriorating |
| CounterThe company's strong and consistent free cash flow generation — reflected in a 61% FCF quality score — provides sufficient capacity to service and reduce debt over time. | ||
The stock is trading below its 200-day moving average with the moving average slope declining at negative 1.8% per month and is forming a death-cross recovery pattern, suggesting the longer-term trend remains unfavorable despite recent MACD improvement. Momentum breakdown | Price rises above the 200-day moving average and sustains above it for at least 30 days, confirming the downtrend has reversed. | ↓Deteriorating |
| CounterRSI at 56 and improving MACD indicate positive near-term momentum; a positive news catalyst in the next earnings print could accelerate the recovery. | ||
Sherwin-Williams generates a 61% return on equity, ranking it at the top of its specialty chemicals peer group on quality metrics and demonstrating a durable ability to compound capital for shareholders.
→StableQuality breakdown
- Expectation
- Return on equity remains above 50% over the next 12 months, confirming the business earns well above its cost of capital.
CounterElevated return on equity is partly a function of high financial leverage at 3.3x debt-to-equity, which could reverse into a liability if credit conditions tighten or revenue softens.
The company has beaten consensus earnings per share estimates in 3 of the last 4 quarters with an average positive surprise, demonstrating consistent delivery against analyst expectations.
→StableEarnings
- Expectation
- Earnings beats continue in at least 3 of the next 4 quarters with average surprise above 2%.
CounterThe one miss in the last four quarters came with an 11.2% negative surprise, suggesting occasional quarter-to-quarter volatility that could return.
With a debt-to-equity ratio of 3.3x, Sherwin-Williams carries above-average financial leverage for the specialty chemicals industry, which the scoring engine penalizes and which limits financial flexibility during downturns.
↓DeterioratingBear case
- Expectation
- Debt-to-equity ratio declines to below 2.5x within 12 months through earnings-driven debt reduction.
CounterThe company's strong and consistent free cash flow generation — reflected in a 61% FCF quality score — provides sufficient capacity to service and reduce debt over time.
The stock is trading below its 200-day moving average with the moving average slope declining at negative 1.8% per month and is forming a death-cross recovery pattern, suggesting the longer-term trend remains unfavorable despite recent MACD improvement.
↓DeterioratingMomentum breakdown
- Expectation
- Price rises above the 200-day moving average and sustains above it for at least 30 days, confirming the downtrend has reversed.
CounterRSI at 56 and improving MACD indicate positive near-term momentum; a positive news catalyst in the next earnings print could accelerate the recovery.
Per-dimension breakdown
Quality
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 6.3 |
| Gross margin | 5.8 |
| Op margin | 5.7 |
| Net margin | 5.4 |
| Current ratio | 3.5 |
| FCF quality | 6.1 |
| Moat | 6.1 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 61%
- ▸Strong Piotroski F-Score: 7/9
Growth
3.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.2 |
| EPS growth | 3.5 |
Momentum
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 1.0 |
| Volume | 2.3 |
- ▸Capitulation risk (RSI 29, below 200MA)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.0%/30d — confirmed downtrend
Sentiment
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 7.6 |
| erm sentiment | 5.6 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.9 |
| quality rank | 8.7 |
| growth rank | 5.6 |
- ▸Superior ROE vs peers
Technical
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.4 |
| support resistance | 6.9 |
| 52w position | 6.8 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.6 |
| days to cover | 8.3 |
| volatility | 5.1 |
| put call | 3.2 |
| implied vol | 6.4 |
| beta | 6.6 |
| debt equity | 1.7 |
- ▸Elevated put/call: 1.52
Catalyst
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 2.5 |
| dividend safety | 8.5 |
- ▸Strong earnings: 3B/1M
- ▸Earnings in 3 days
- ▸Dividend aristocrat: 1.0% yield
How the verdict was assembled
Engine trigger
Earnings in 3 days. Wait until post-earnings.
Engine technical detail
verdict_path:
L3:NEWS_BLOCKPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (4)
- MOMENTUM:3.3<4.5
- ASYMMETRY:1.3<1.5@spot
- DEATH_CROSS:HARD_BLOCK
- EARNINGS_PROXIMITY:3d<=7d
Warning (0)
none
Reward-to-Risk
1.28
Upside
+7.6%
Downside
5.9%
Sizing output
STARTER
SetupFalling Knife — Death cross, below all MAs, RSI 29, MACD bearish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Earnings in 3 days. Wait until post-earnings. The 10-dimension scores remain Technical at 7.4 (strongest), but MOMENTUM:3.3<4.5 also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Technical at 7.4, Insider at 7.3, and Sentiment at 7.0; the weakest are Momentum at 3.3, Growth at 3.9, and Peer rank at 4.3. The V9 engine flagged 4 failed gates, producing an asymmetric reward-to-risk of 1.28 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Return On Equity
Trip ifReturn on equity falls below 45% in any annual period, signaling deterioration of the capital efficiency advantage.
- P2Consistent Earnings Beat Record
Trip ifEPS surprise falls below negative 5% in at least 2 of the next 4 quarters, breaking the established beat pattern.
- P3Leverage Headwind Constrains Upside
Trip ifDebt-to-equity ratio rises above 4.0x, indicating leverage is increasing rather than declining toward safer levels.
- P4Downtrend Limits Near Term Entry
Trip ifStock price drops below $295, more than 7% below current price of $320.24, confirming continuation of the downtrend.