SHW Sherwin-Williams
Wonderful moat, mature single-digit-growth business — priced today as if it were a 15%-grower.
The business
Sherwin-Williams manufactures and sells paints, coatings, and related products, distributing largely through its own network of ~5,000 company-operated stores that serve professional painting contractors, plus a Performance Coatings segment selling industrial/OEM coatings globally.
Quality gate · 84/100
Moat & management
| Moat | wide moat |
| Source | scale |
| Trajectory | widening |
| Management | excellent |
The proprietary store network creates real switching costs for pro contractors (credit accounts, color-matching, job-site delivery, loyalty programs) that big-box and online rivals can't easily replicate, while scale in raw-material sourcing and manufacturing supports industry-leading margins; steady store count growth and repeated successful price increases (the 8% hike noted in recent news) show the moat is still strengthening, not just holding.
Consistent high-ROIC reinvestment into store growth, disciplined pricing, a well-integrated Valspar acquisition, and steady buybacks (share count down ~1.5%/yr) alongside a long dividend-growth streak reflect genuine owner-oriented capital allocation, though debt load (net debt/EBITDA 2.69x) is a bit more levered than ideal.
Owner-earnings inputs
| Owner earnings (TTM) | 2.74B |
| Owner-earnings yield | 3.3% |
| Free-cash-flow yield | 3.8% |
| Growth used (normalized) | 8.0% |
| Market-implied growth (reverse DCF) | 14.9% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 9.6% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 2.96B | 8.0% | 2.70B |
| 2 | 3.19B | 7.6% | 2.65B |
| 3 | 3.42B | 7.3% | 2.60B |
| 4 | 3.66B | 6.9% | 2.53B |
| 5 | 3.90B | 6.6% | 2.46B |
| 6 | 4.14B | 6.2% | 2.39B |
| 7 | 4.38B | 5.9% | 2.30B |
| 8 | 4.62B | 5.5% | 2.22B |
| 9 | 4.86B | 5.1% | 2.13B |
| 10 | 5.09B | 4.8% | 2.03B |
| 11 | 5.32B | 4.4% | 1.94B |
| 12 | 5.53B | 4.1% | 1.84B |
| 13 | 5.74B | 3.7% | 1.74B |
| 14 | 5.93B | 3.4% | 1.64B |
| 15 | 6.11B | 3.0% | 1.54B |
Key risks
- Housing/repaint cycle sensitivity to interest rates and construction activity
- Raw material (titanium dioxide, resins, oil derivatives) cost volatility compressing margins
- Elevated leverage limits flexibility if a downturn coincides with M&A ambitions
Catalysts
- Continued store network expansion and market share gains from independent/regional paint retailers
- Pricing power demonstrated by successful 8% increase supporting margin expansion
Recent news
score · 8 articles
- Stocks making big moves yesterday: H&R Block, Corning, Sherwin-Williams, Brown & Brown, and Simpson
- Why the Dow Is Having an Especially Bad Day
- Stock Market News for July 29, 2026
- Sherwin-Williams (SHW) Is Up 11.2% After Strong Q2, Guidance Hike And 8% Price Increase
- Why Sherwin-Williams (SHW) Stock Is Trading Up Today
- Review & Preview: ‘One Big Global Trade’
- Sherwin-Williams Co (SHW) Q2 2026 Earnings Call Highlights: Strong Growth Amid Strategic ...
- Stocks Settle Mostly Higher on Positive Earnings Results
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~15%/yr owner-earnings growth over 15y (reverse DCF); model credits 8%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.