SHW - Embedded Expectations Analysis - 2019 01 16
The Sherwin-Williams Company (SHW:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 23.4x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about their sales growth and growth potential, their outlook since integrating Valspar, and the impact of inflation on raw material costsSpecifically, management may lack confidence in their ability to deliver sales growth, due to unfavorable macroeconomic conditions and may be overstating the growth potential of numerous segments and geographies in their portfolio. Additionally, management may be overstating the ability of price increases to offset inflation-driven cost increases. Moreover, management may be concerned about increasing raw material prices, as well as acquisition and integration costs associated with the purchase of Valspar. Also, they may be overstating their ability to decrease
cost pressures
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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