Value
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.8 |
| P/S | 7.8 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.7 |
| PEG | 3.9 |
| Analyst target | 4.0 |
- ▸Forward P/E: 26.6x
- ▸PEG: 2.72
SHW · Why this verdict
Why Sherwin-Williams Company (The) (SHW) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceHIGH
MacroNEUTRAL
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. | →Stable |
| 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. | →Stable |
| 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.
→StableBear 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.
→StableMomentum 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.
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.
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
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 7.5 |
| Volume | 1.4 |
- ▸Overbought (RSI 79)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat/negative + RSI 79 (late-cycle distribution risk)
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 5.9 |
| erm sentiment | 4.3 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.0 |
| quality rank | 8.7 |
| growth rank | 5.5 |
- ▸Superior ROE vs peers
Technical
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.7 |
| support resistance | 0.0 |
| 52w position | 8.7 |
Risk (lower is worse)
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.2 |
| days to cover | 6.7 |
| volatility | 6.0 |
| put call | 10.0 |
| implied vol | 5.7 |
| beta | 6.6 |
| debt equity | 1.7 |
Catalyst
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 2.5 |
| dividend safety | 6.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 91.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.6>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:24d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (1)
- DEATH_CROSS:momentum=6.6>=5.0 recovering
Reward-to-Risk
-0.30
Upside
-4.5%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 79
EdgeCatalyst-Driven — Earnings in 24d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 6.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.3=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.30 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 6.6, Risk (lower is worse) at 6.4, and Quality at 6.3; the weakest are Technical at 3.1, Growth at 3.9, and Value at 4.1. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.30 and an engine sizing output of AVOID.
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.