AGU Fundamental Research Investment Analysis, Agrium Inc.

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Sherwin-Williams Company (SHW)

The Razor’s Edge

2-Year Price History

Recent Price
52-Week Price
$44.51 – $65.00
Market Capitalization
$5.4 Billion
Dividend Yield
Most Recent Dividend

About Sherwin-Williams Company

Sherwin-Williams Company is considered to operate in the Basic Materials sector. They specifically operate in the Chemicals-Major Diversified business segment contained within the Chemicals industry.

The Company is engaged in the developing, manufacturing, distributing and selling of paint, coatings and related products to professional, industrial, commercial and retail customers.

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SHW Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company’s stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, SHW the high and low end of the Price to Sales per share ratios are 0.67x and 0.47x respectively.

Notice that SHW’s current Price to Sales per share ratio is 0.69x, which is high enough compared with historical norms of SHW to cause some concern. The current Price to Sales per share is near the upper end of the historical range. In our eyes, this is a negative factor because it is more likely that it will return to the normal range than continue rising outside of the range. At current sales per share levels, we would need to see a decline in the Price to Sales ratio of 21% merely to return SHW to its historical average.

SHW Cash Earnings

Looking at SHW specifically in their Cash Earnings capabilities, Ockham views SHW as above their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for SHW, the current level of Cash Earnings compared to its historical levels helps identify where SHW is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 7.62 and a historical low Cash Earnings per share ratio of 5.34, an investor can relate where value becomes optimal.

So, again, with a current Price to Cash Earnings per share ratio of 7.28, SHW is presently above its historical range. Ockham Research is always focused upon the value that investors have placed upon a given metric in the past. In other words, how much would an investor pay for a particular level of Cash Earnings in terms of stock price, and how does that relate to today. Naturally, we utilize proprietary methods to accomplish this, but the basic premise holds true and is simple to understand. For SHW, we are a bit negative on the Cash Earnings level given its higher than historical norm.

SHW Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company’s inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from SHW against the historic high and low levels over an available data range. Because SHW has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In SHW’s case, the estimated annual dividend is $1.40 producing a current dividend yield of 2.98%. The highest dividend yield from SHW in recent history was 3.15% while the lowest dividend yield was 1.49%. It’s hard not to notice that SHW pays a current dividend yield that is 28.45% above the historical median. This peaks our interest since our analysis is looks favorably upon dividend yields that are greater than the historical median.

Peer Comparison


Sherwin-Williams Company Industry Grouping

Company Ticker Market Cap (Ml) Latest
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding SHW) 8.07 4.33 » 30.20 1.90 0.62 » 3.95 13.80% 19.40%
*10 year range does not include current year values
Agrium Inc. AGU $6.1 Billion $38.48 3.56 2.49 » 20.94 0.60 0.41 » 2.28 20.40% 13.97%
Sherwin-Williams Company SHW $5.4 Billion $46.01 7.28 5.34 » 25.12 0.69 0.52 » 1.13 9.08% 31.16%
Sigma-Aldrich Corp. SIAL $4.7 Billion $37.67 9.87 9.64 » 68.76 1.98 1.40 » 3.59 11.05% 19.64%
Sociedad Quimica Y Minera De Chile S.A.Sponsored ADR Repr 1 Pref Shs -B- SQM $3.6 Billion $29.81 15.55 4.09 » 29.14 4.97 0.79 » 9.30 16.48% 10.48%
FMC Corp. FMC $3.3 Billion $44.76 7.11 2.47 » 16.67 1.17 0.19 » 2.08 7.28% 12.06%
CF Industries Holdings Inc. CF $3.0 Billion $52.68 4.27 2.94 » 15.51 0.79 0.32 » 2.51 n/a 40.86%
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RazorWire™ & Community Discussion

Fox Business
2/19/2009 11:12 AM
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1/27/2009 11:22 AM
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Key Fundamentals

SHW – Sherwin-Williams Company Fundamentals
Price (2/18/2009) $46.01
Volume (2/18/2009) 1.5 Million
10 Day Average Volume 2.0 Million
13 Week Price Range $45.31 – $61.42
52 Week Price Range $44.51 – $65.00
LTM Revenue $8.0 Billion
Shares Outstanding (12/2008) 116.9 Million
Market Capitalization $5.4 Billion
Shares Held By Institutions 87.8 Million
Institutional Holders 531
% Shares Held By Institutions 75.10%
Earnings Per Share (EPS) $4.00
P/E Ratio 11.50
Book Value Per Share $13.02
Gross Margin 44.60%
Quarterly Dividend 1.40
Dividend Yield 3.00%
Beta 0.72
Fiscal Year Ends December