SHW - Embedded Expectations Analysis - 2021 03 18
The Sherwin-Williams Company (SHW:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 27.9x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about margin targets, the pace of recovery of the commercial market, and rising raw material costsSpecifically, management may lack confidence in their ability to expand gross margins, achieve their operating margin and SG&A leverage targets, and sustain interior paint and auto refinishing sales growth. Moreover, they may be exaggerating the potential of contractor support activities in the residential market, the demand for commercial property upgrades, and strength of their positioning in the multifamily homebuilding market. Additionally, management may have concerns about challenges in the homebuilding labor market, rising raw material costs, and the pace of recovery of their General Industrial business. They may also lack confidence in their ability to continue improving spray equipment quality and grow their business in Australia and China
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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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
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