SHW - Embedded Expectations Analysis - 2018 11 13
The Sherwin-Williams Company (SHW:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 23.9x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about their growth initiatives, their outlook since integrating Valspar, and heightened raw material basket costsSpecifically, management may lack confidence in their ability to execute on their growth initiatives, and to meet their net sales growth expectations. Furthermore, they may lack confidence in their ability to sustain growth of TAG, and to add at least ninety new stores in North America. They may also be concerned about higher raw material costs, and may be exaggerating their confidence in the outlook for the organization since integrating Valspar. Additionally, they may lack confidence in their ability to reward shareholders over the long term, and to adjust their prices as raw material costs fluctuate. Moreover, they may have concerns about their e-commerce initiative, and may be exaggerating the strength of their packaging business. In addition, they may be concerned about their ability to expand their margins, and that they may not see price relief in their raw material basket. Finally, they may be concerned about increased interest expense levels, and about volatility in the TiO2 market
Sherwin-Williams is engaged in the development, manufacture, distribution and sale of paint, coatings and related products to industrial, commercial and retail customers. The company's segments are: The Americas Group, which markets and sells Sherwin-Williams? and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products; Consumer Brands Group, which supplies architectural paints, stains, varnishes, and industrial products, among others; and Performance Coatings Group, which develops and sells industrial coatings, automotive refinish, protective and marine coatings, coil coatings, packaging coatings and resins and colorants.
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