Intrinsic value of Sherwin-Williams - SHW

Previous Close

$402.30

  Intrinsic Value

$2,197

stock screener

  Rating & Target

str. buy

+446%

Previous close

$402.30

 
Intrinsic value

$2,197

 
Up/down potential

+446%

 
Rating

str. buy

We calculate the intrinsic value of SHW stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.56
  37.50
  34.25
  31.33
  28.69
  26.32
  24.19
  22.27
  20.54
  18.99
  17.59
  16.33
  15.20
  14.18
  13.26
  12.43
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
Revenue, $m
  11,856
  16,302
  21,885
  28,741
  36,988
  46,724
  58,027
  70,950
  85,527
  101,769
  119,671
  139,216
  160,375
  183,115
  207,397
  233,187
  260,450
  289,158
  319,288
  350,828
  383,772
  418,124
  453,899
  491,121
  529,824
  570,050
  611,853
  655,293
  700,442
  747,378
  796,188
Variable operating expenses, $m
 
  12,315
  16,494
  21,625
  27,798
  35,085
  43,545
  53,219
  64,129
  76,286
  89,686
  104,202
  120,040
  137,060
  155,236
  174,539
  194,945
  216,433
  238,986
  262,593
  287,251
  312,963
  339,741
  367,601
  396,570
  426,679
  457,968
  490,483
  524,277
  559,408
  595,942
Fixed operating expenses, $m
 
  1,184
  1,213
  1,244
  1,275
  1,307
  1,339
  1,373
  1,407
  1,442
  1,478
  1,515
  1,553
  1,592
  1,632
  1,673
  1,715
  1,757
  1,801
  1,846
  1,893
  1,940
  1,988
  2,038
  2,089
  2,141
  2,195
  2,250
  2,306
  2,364
  2,423
Total operating expenses, $m
  10,116
  13,499
  17,707
  22,869
  29,073
  36,392
  44,884
  54,592
  65,536
  77,728
  91,164
  105,717
  121,593
  138,652
  156,868
  176,212
  196,660
  218,190
  240,787
  264,439
  289,144
  314,903
  341,729
  369,639
  398,659
  428,820
  460,163
  492,733
  526,583
  561,772
  598,365
Operating income, $m
  1,740
  2,803
  4,178
  5,872
  7,915
  10,332
  13,142
  16,359
  19,991
  24,040
  28,507
  33,498
  38,782
  44,462
  50,530
  56,975
  63,790
  70,967
  78,501
  86,389
  94,628
  103,221
  112,170
  121,482
  131,165
  141,230
  151,690
  162,560
  173,859
  185,606
  197,823
EBITDA, $m
  1,938
  3,063
  4,489
  6,244
  8,362
  10,867
  13,779
  17,112
  20,876
  25,072
  29,700
  34,756
  40,230
  46,116
  52,403
  59,081
  66,143
  73,579
  81,385
  89,558
  98,094
  106,997
  116,270
  125,918
  135,950
  146,378
  157,216
  168,479
  180,186
  192,357
  205,014
Interest expense (income), $m
  154
  96
  218
  372
  561
  788
  1,056
  1,367
  1,723
  2,125
  2,572
  3,065
  3,604
  4,187
  4,813
  5,482
  6,192
  6,943
  7,734
  8,564
  9,433
  10,340
  11,286
  12,272
  13,297
  14,363
  15,471
  16,622
  17,819
  19,063
  20,355
Earnings before tax, $m
  1,595
  2,708
  3,960
  5,500
  7,354
  9,544
  12,086
  14,991
  18,267
  21,915
  25,934
  30,433
  35,178
  40,276
  45,717
  51,493
  57,598
  64,024
  70,768
  77,825
  85,196
  92,881
  100,884
  109,210
  117,868
  126,867
  136,219
  145,938
  156,040
  166,544
  177,468
Tax expense, $m
  462
  731
  1,069
  1,485
  1,986
  2,577
  3,263
  4,048
  4,932
  5,917
  7,002
  8,217
  9,498
  10,874
  12,344
  13,903
  15,551
  17,287
  19,107
  21,013
  23,003
  25,078
  27,239
  29,487
  31,824
  34,254
  36,779
  39,403
  42,131
  44,967
  47,916
Net income, $m
  1,133
  1,977
  2,891
  4,015
  5,369
  6,967
  8,823
  10,944
  13,335
  15,998
  18,932
  22,216
  25,680
  29,401
  33,373
  37,590
  42,046
  46,738
  51,660
  56,812
  62,193
  67,803
  73,645
  79,723
  86,043
  92,613
  99,440
  106,535
  113,909
  121,577
  129,551

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  890
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  6,753
  8,062
  10,824
  14,214
  18,293
  23,108
  28,698
  35,089
  42,298
  50,331
  59,185
  68,851
  79,315
  90,561
  102,570
  115,325
  128,808
  143,006
  157,907
  173,505
  189,798
  206,787
  224,480
  242,889
  262,030
  281,924
  302,598
  324,082
  346,411
  369,623
  393,762
Adjusted assets (=assets-cash), $m
  5,863
  8,062
  10,824
  14,214
  18,293
  23,108
  28,698
  35,089
  42,298
  50,331
  59,185
  68,851
  79,315
  90,561
  102,570
  115,325
  128,808
  143,006
  157,907
  173,505
  189,798
  206,787
  224,480
  242,889
  262,030
  281,924
  302,598
  324,082
  346,411
  369,623
  393,762
Revenue / Adjusted assets
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
  2.022
Average production assets, $m
  1,324
  1,826
  2,451
  3,219
  4,143
  5,233
  6,499
  7,946
  9,579
  11,398
  13,403
  15,592
  17,962
  20,509
  23,229
  26,117
  29,170
  32,386
  35,760
  39,293
  42,982
  46,830
  50,837
  55,006
  59,340
  63,846
  68,528
  73,393
  78,450
  83,706
  89,173
Working capital, $m
  798
  897
  1,204
  1,581
  2,034
  2,570
  3,191
  3,902
  4,704
  5,597
  6,582
  7,657
  8,821
  10,071
  11,407
  12,825
  14,325
  15,904
  17,561
  19,296
  21,107
  22,997
  24,964
  27,012
  29,140
  31,353
  33,652
  36,041
  38,524
  41,106
  43,790
Total debt, $m
  1,953
  2,762
  4,709
  7,099
  9,974
  13,369
  17,310
  21,816
  26,898
  32,561
  38,803
  45,618
  52,995
  60,924
  69,390
  78,382
  87,888
  97,897
  108,403
  119,399
  130,886
  142,863
  155,337
  168,315
  181,809
  195,834
  210,409
  225,556
  241,297
  257,662
  274,681
Total liabilities, $m
  4,874
  5,684
  7,631
  10,021
  12,896
  16,291
  20,232
  24,738
  29,820
  35,483
  41,725
  48,540
  55,917
  63,846
  72,312
  81,304
  90,810
  100,819
  111,325
  122,321
  133,808
  145,785
  158,259
  171,237
  184,731
  198,756
  213,331
  228,478
  244,219
  260,584
  277,603
Total equity, $m
  1,878
  2,378
  3,193
  4,193
  5,396
  6,817
  8,466
  10,351
  12,478
  14,848
  17,459
  20,311
  23,398
  26,716
  30,258
  34,021
  37,998
  42,187
  46,583
  51,184
  55,990
  61,002
  66,222
  71,652
  77,299
  83,168
  89,266
  95,604
  102,191
  109,039
  116,160
Total liabilities and equity, $m
  6,752
  8,062
  10,824
  14,214
  18,292
  23,108
  28,698
  35,089
  42,298
  50,331
  59,184
  68,851
  79,315
  90,562
  102,570
  115,325
  128,808
  143,006
  157,908
  173,505
  189,798
  206,787
  224,481
  242,889
  262,030
  281,924
  302,597
  324,082
  346,410
  369,623
  393,763
Debt-to-equity ratio
  1.040
  1.160
  1.470
  1.690
  1.850
  1.960
  2.040
  2.110
  2.160
  2.190
  2.220
  2.250
  2.260
  2.280
  2.290
  2.300
  2.310
  2.320
  2.330
  2.330
  2.340
  2.340
  2.350
  2.350
  2.350
  2.350
  2.360
  2.360
  2.360
  2.360
  2.360
Adjusted equity ratio
  0.176
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,133
  1,977
  2,891
  4,015
  5,369
  6,967
  8,823
  10,944
  13,335
  15,998
  18,932
  22,216
  25,680
  29,401
  33,373
  37,590
  42,046
  46,738
  51,660
  56,812
  62,193
  67,803
  73,645
  79,723
  86,043
  92,613
  99,440
  106,535
  113,909
  121,577
  129,551
Depreciation, amort., depletion, $m
  198
  260
  310
  372
  447
  535
  637
  754
  885
  1,032
  1,194
  1,257
  1,449
  1,654
  1,873
  2,106
  2,352
  2,612
  2,884
  3,169
  3,466
  3,777
  4,100
  4,436
  4,786
  5,149
  5,526
  5,919
  6,327
  6,751
  7,191
Funds from operations, $m
  1,121
  2,237
  3,201
  4,387
  5,815
  7,502
  9,459
  11,697
  14,220
  17,030
  20,126
  23,473
  27,129
  31,055
  35,246
  39,696
  44,399
  49,349
  54,544
  59,981
  65,659
  71,580
  77,745
  84,159
  90,829
  97,761
  104,966
  112,454
  120,236
  128,327
  136,743
Change in working capital, $m
  -188
  245
  307
  377
  454
  535
  622
  711
  802
  893
  985
  1,075
  1,164
  1,251
  1,336
  1,418
  1,499
  1,579
  1,657
  1,735
  1,812
  1,889
  1,968
  2,047
  2,129
  2,212
  2,299
  2,389
  2,483
  2,581
  2,685
Cash from operations, $m
  1,309
  1,992
  2,894
  4,010
  5,362
  6,966
  8,838
  10,986
  13,418
  16,137
  19,141
  22,398
  25,965
  29,804
  33,911
  38,278
  42,899
  47,771
  52,887
  58,246
  63,847
  69,690
  75,777
  82,112
  88,700
  95,549
  102,667
  110,064
  117,753
  125,746
  134,058
Maintenance CAPEX, $m
  0
  -107
  -147
  -198
  -260
  -334
  -422
  -524
  -641
  -773
  -919
  -1,081
  -1,257
  -1,449
  -1,654
  -1,873
  -2,106
  -2,352
  -2,612
  -2,884
  -3,169
  -3,466
  -3,777
  -4,100
  -4,436
  -4,786
  -5,149
  -5,526
  -5,919
  -6,327
  -6,751
New CAPEX, $m
  -239
  -502
  -625
  -768
  -924
  -1,090
  -1,266
  -1,447
  -1,633
  -1,819
  -2,005
  -2,189
  -2,370
  -2,547
  -2,720
  -2,888
  -3,053
  -3,215
  -3,375
  -3,532
  -3,690
  -3,847
  -4,007
  -4,169
  -4,335
  -4,505
  -4,682
  -4,865
  -5,057
  -5,257
  -5,467
Cash from investing activities, $m
  -304
  -609
  -772
  -966
  -1,184
  -1,424
  -1,688
  -1,971
  -2,274
  -2,592
  -2,924
  -3,270
  -3,627
  -3,996
  -4,374
  -4,761
  -5,159
  -5,567
  -5,987
  -6,416
  -6,859
  -7,313
  -7,784
  -8,269
  -8,771
  -9,291
  -9,831
  -10,391
  -10,976
  -11,584
  -12,218
Free cash flow, $m
  1,005
  1,383
  2,121
  3,045
  4,179
  5,542
  7,150
  9,015
  11,145
  13,545
  16,217
  19,128
  22,338
  25,809
  29,537
  33,516
  37,740
  42,203
  46,901
  51,830
  56,989
  62,376
  67,994
  73,843
  79,930
  86,258
  92,836
  99,673
  106,777
  114,163
  121,841
Issuance/(repayment) of debt, $m
  -2
  1,550
  1,947
  2,390
  2,875
  3,395
  3,941
  4,506
  5,082
  5,663
  6,242
  6,815
  7,377
  7,928
  8,467
  8,992
  9,506
  10,009
  10,505
  10,997
  11,486
  11,977
  12,474
  12,978
  13,494
  14,026
  14,575
  15,146
  15,742
  16,365
  17,018
Issuance/(repurchase) of shares, $m
  87
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  5
  1,550
  1,947
  2,390
  2,875
  3,395
  3,941
  4,506
  5,082
  5,663
  6,242
  6,815
  7,377
  7,928
  8,467
  8,992
  9,506
  10,009
  10,505
  10,997
  11,486
  11,977
  12,474
  12,978
  13,494
  14,026
  14,575
  15,146
  15,742
  16,365
  17,018
Total cash flow (excl. dividends), $m
  996
  2,933
  4,068
  5,435
  7,054
  8,936
  11,091
  13,521
  16,227
  19,208
  22,459
  25,943
  29,715
  33,738
  38,004
  42,508
  47,245
  52,212
  57,406
  62,827
  68,475
  74,354
  80,467
  86,821
  93,424
  100,284
  107,411
  114,819
  122,519
  130,527
  138,859
Retained Cash Flow (-), $m
  -1,010
  -649
  -815
  -1,000
  -1,203
  -1,420
  -1,649
  -1,885
  -2,127
  -2,370
  -2,612
  -2,851
  -3,087
  -3,318
  -3,543
  -3,763
  -3,978
  -4,188
  -4,396
  -4,601
  -4,806
  -5,012
  -5,219
  -5,431
  -5,647
  -5,869
  -6,099
  -6,338
  -6,587
  -6,848
  -7,121
Prev. year cash balance distribution, $m
 
  149
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,433
  3,254
  4,435
  5,851
  7,516
  9,442
  11,635
  14,101
  16,839
  19,847
  23,091
  26,628
  30,420
  34,461
  38,746
  43,268
  48,024
  53,010
  58,225
  63,669
  69,342
  75,248
  81,391
  87,777
  94,415
  101,313
  108,481
  115,932
  123,680
  131,738
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  2,332
  2,979
  3,860
  4,817
  5,826
  6,852
  7,861
  8,813
  9,673
  10,405
  10,966
  11,363
  11,566
  11,569
  11,375
  10,995
  10,449
  9,762
  8,965
  8,090
  7,172
  6,244
  5,334
  4,471
  3,673
  2,956
  2,328
  1,794
  1,350
  992
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Sherwin-Williams Company (Sherwin-Williams) is engaged in the development, manufacture, distribution and sale of paint, coatings and related products. The Company's segments are Paint Stores Group, Consumer Group, Global Finishes Group, Latin America Coatings Group and Administrative. The Paint Stores Group markets and sells Sherwin-Williams branded architectural paint and coatings, protective and marine products, original equipment manufacturer (OEM) product finishes and related items. The Consumer Group segment manufactures and distributes a range of paint, coatings and related products. The Global Finishes Group develops, licenses and manufactures a range of protective and marine products, automotive finishes and refinish products, OEM product finishes and related products. The Latin America Coatings Group develops, licenses, manufactures and distributes a range of architectural paint and coatings, protective and marine products, OEM product finishes and related products.

FINANCIAL RATIOS  of  Sherwin-Williams (SHW)

Valuation Ratios
P/E Ratio 33
Price to Sales 3.2
Price to Book 19.9
Price to Tangible Book
Price to Cash Flow 28.6
Price to Free Cash Flow 35
Growth Rates
Sales Growth Rate 4.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.1%
Cap. Spend. - 3 Yr. Gr. Rate 7.4%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 64.5%
Total Debt to Equity 104%
Interest Coverage 11
Management Effectiveness
Return On Assets 19.8%
Ret/ On Assets - 3 Yr. Avg. 18%
Return On Total Capital 34.1%
Ret/ On T. Cap. - 3 Yr. Avg. 33%
Return On Equity 82.5%
Return On Equity - 3 Yr. Avg. 86%
Asset Turnover 1.9
Profitability Ratios
Gross Margin 49.9%
Gross Margin - 3 Yr. Avg. 48.5%
EBITDA Margin 16.4%
EBITDA Margin - 3 Yr. Avg. 15.3%
Operating Margin 14.7%
Oper. Margin - 3 Yr. Avg. 13.5%
Pre-Tax Margin 13.5%
Pre-Tax Margin - 3 Yr. Avg. 12.8%
Net Profit Margin 9.6%
Net Profit Margin - 3 Yr. Avg. 8.9%
Effective Tax Rate 29%
Eff/ Tax Rate - 3 Yr. Avg. 30.7%
Payout Ratio 27.5%

SHW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SHW stock intrinsic value calculation we used $11856 million for the last fiscal year's total revenue generated by Sherwin-Williams. The default revenue input number comes from 2016 income statement of Sherwin-Williams. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SHW stock valuation model: a) initial revenue growth rate of 37.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for SHW is calculated based on our internal credit rating of Sherwin-Williams, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Sherwin-Williams.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SHW stock the variable cost ratio is equal to 75.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1155 million in the base year in the intrinsic value calculation for SHW stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.9% for Sherwin-Williams.

Corporate tax rate of 27% is the nominal tax rate for Sherwin-Williams. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SHW stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SHW are equal to 11.2%.

Life of production assets of 12.4 years is the average useful life of capital assets used in Sherwin-Williams operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SHW is equal to 5.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1878 million for Sherwin-Williams - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 94.21 million for Sherwin-Williams is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Sherwin-Williams at the current share price and the inputted number of shares is $37.9 billion.

RELATED COMPANIES Price Int.Val. Rating
PPG PPG Industries 116.16 97.29  hold
AXTA Axalta Coating 30.56 16.44  sell
RPM RPM Internatio 50.86 41.48  sell
FOE Ferro Corp. 21.70 33.50  buy
MAS Masco 43.21 14.02  str.sell

COMPANY NEWS

▶ How Safe is Sherwin-Williams' Dividend?   [01:45PM  Motley Fool]
▶ Better Stock: Home Depot (HD) vs. Sherwin-Williams (SHW)   [Jan-30-18 09:01PM  Motley Fool]
▶ Sherwin-Williams misses 4Q profit forecasts   [07:33AM  Associated Press]
▶ PPGs Performance Coatings Revenue and Margin Improve in 4Q17   [Jan-22-18 12:50PM  Market Realist]
▶ 3 Stocks for Retirees to Grow Their Nest Egg   [Jan-13-18 11:03AM  Motley Fool]
▶ PPG Industries: Stock Performance since Its 3Q17 Earnings   [Jan-12-18 07:35AM  Market Realist]
▶ Will RPM Internationals Dividend Yield Be Steady?   [Jan-10-18 10:18AM  Market Realist]
▶ Sherwin-Williams Continues Its Valuation Supremacy   [Dec-28-17 10:31AM  Market Realist]
▶ Whats Sherwin-Williams Short Interest?   [Dec-27-17 11:20AM  Market Realist]
▶ The 3 Best Dividend Aristocrats of 2017   [06:48AM  Motley Fool]
▶ 3 Stocks for Warren Buffett Fans   [Dec-13-17 04:30PM  Motley Fool]
▶ The 3 Stocks on the MFM Team's Radar This Week   [Dec-05-17 07:50PM  Motley Fool]
▶ See which stocks fund managers are buying   [Nov-29-17 03:09PM  American City Business Journals]
▶ Sherwin-Williams Maintains a Valuation Premium over Its Peer   [Nov-23-17 09:01AM  Market Realist]
▶ Why Sherwin-Williamss Dividend Yield Is on a Downward Trend   [Nov-22-17 10:31AM  Market Realist]
▶ Heres Whats Driving Sherwin-Williams Stock   [07:32AM  Market Realist]
▶ 3 Stocks to Hold for the Next 50 Years   [Nov-16-17 07:32AM  Motley Fool]
▶ Should You Buy The Sherwin-Williams Company (SHW) Now?   [Nov-02-17 09:12PM  Simply Wall St.]
▶ Sherwin-Williams Suffers From Hurricane Hits   [Oct-24-17 10:05AM  Motley Fool]
▶ Sherwin-Williams tops Street 3Q forecasts   [07:41AM  Associated Press]
▶ 3 Stocks Retirees Should Buy on a Market Pullback   [Oct-12-17 07:33AM  Motley Fool]
▶ 3 Embarrassingly Low Dividend Stocks   [Oct-10-17 09:10AM  Motley Fool]
▶ Cramer: Towel Throwers Are Always Late to the Game   [Oct-05-17 07:01PM  TheStreet.com]
▶ 7 negatives-turned-positives fueling the bull market   [Oct-03-17 07:07PM  CNBC Videos]
▶ Cramer: Bull Market Is in Pamplona Mode   [07:01PM  TheStreet.com]
▶ Sherwin-Williams Hints at What to Expect in 3Q17   [Oct-02-17 01:36PM  Market Realist]
Financial statements of SHW
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.