Value
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.8 |
| P/S | 7.9 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.7 |
| PEG | 3.8 |
| Analyst target | 4.0 |
- ▸Forward P/E: 26.7x
- ▸PEG: 2.75
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.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.3/10
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%. | ↓Deteriorating |
| 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.
↓DeterioratingEarnings
- 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
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 6.3 |
| Gross margin | 5.8 |
| Op margin | 7.2 |
| Net margin | 5.5 |
| Current ratio | 2.9 |
| FCF quality | 6.7 |
| Moat | 6.1 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 65%
- ▸Strong Piotroski F-Score: 7/9
Growth
4.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.4 |
| EPS growth | 4.9 |
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 6.1 |
| erm sentiment | 4.9 |
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
4.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.1 |
| quality rank | 8.8 |
| growth rank | 4.4 |
- ▸Superior ROE vs peers
Technical
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.3 |
| support resistance | 1.3 |
| 52w position | 9.3 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.6 |
| days to cover | 8.3 |
| volatility | 4.3 |
| put call | 0.0 |
| implied vol | 6.5 |
| max pain risk | 3.0 |
| beta | 6.6 |
| debt equity | 1.1 |
- ▸Elevated put/call: 12.60
- ▸Above max pain $270
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.5 |
| dividend safety | 6.8 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.0>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:77d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.2=NEGATIVE
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.22
Upside
-3.3%
Downside
15.0%
Sizing output
AVOID
SetupMomentum Cont — Trend continuation, RSI 68, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Insider at 7.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.22 — supplementary context, not the trigger for this path.
The strongest dimensions are Insider at 7.3, Quality at 6.5, and Sentiment at 6.3; the weakest are Peer rank at 4.1, Value at 4.1, and Technical at 4.3. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.22 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.