Sherwin-Williams Shows Signs of Weak Performance Amid Industry Struggles

Cleveland, Ohio, home to The Sherwin-Williams Company (SHW), is a leading developer and distributor of paints, coatings, and related products across industrial, commercial, and retail markets. With a market capitalization of $91.1 billion, Sherwin-Williams operates under three primary segments: Paint Stores Group (PSG), Consumer Brands Group (CBG), and Performance Coatings Group (PCG). This positioning categorizes the company as a large-cap stock, defined as having a valuation of $10 billion or more.

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As of November 27, 2024, SHW stock reached an all-time high of $400.42 but is now trading 10.1% lower than that peak. In the past three months, the stock has decreased by 6.5%, slightly underperforming the S&P 500 Index ($SPX), which declined 5.8% during the same period.

Longer-term statistics paint a more concerning picture. Over the last 52 weeks, Sherwin-Williams experienced a modest 7% gain. However, its performance over the last six months saw a dip of 21 basis points, significantly lagging behind the S&P 500’s 12.4% rise in the same span.

A recent technical analysis highlights SHW’s struggles; the stock fell below its 50-day moving average in early December 2024 and has hovered near its 200-day moving average, which has remained flat over the past three months.

Following the release of its Q4 results on January 30, Sherwin-Williams stock rose 1.4%. The company reported a 3.4% year-over-year increase in net sales within its PSG segment, generating over $3 billion. Overall, revenue reached $5.3 billion, a slight improvement of 86 basis points from the previous year, but it fell short of Wall Street’s expectations. Nonetheless, the firm reported significant margin expansion across its segments, resulting in a 15.5% increase in adjusted EPS to $2.09, surpassing consensus estimates by about 1%.

Weak demand in the industry has plagued Sherwin-Williams throughout 2024. As it heads into fiscal 2025, the company anticipates achieving above-market sales growth, despite forecasting soft industry demand to persist into 2026. Consequently, Sherwin-Williams expects net sales growth for FY 2025 to be in the low single digits. On a positive note, the company is focusing on cost-cutting measures and enhancing efficiency, which could lead to modest margin growth.

Compared to competitors, Sherwin-Williams has outperformed PPG Industries, Inc. (PPG), which saw a 17.7% drop in stock prices over the past 52 weeks and a 7.5% decline over the last six months.

Market insights indicate a “Moderate Buy” consensus rating among 25 analysts covering SHW stock. The mean price target of $396.82 suggests a potential upside of 10.2% from current levels.

On the date of publication, Aditya Sarawgi did not hold positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more information, please view the Barchart Disclosure Policy here.

 

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