Intrinsic value of Sherwin-Williams - SHW

Previous Close

$443.39

  Intrinsic Value

$629.39

stock screener

  Rating & Target

buy

+42%

Previous close

$443.39

 
Intrinsic value

$629.39

 
Up/down potential

+42%

 
Rating

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

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 41.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  26.40
  24.26
  22.33
  20.60
  19.04
  17.64
  16.37
  15.24
  14.21
  13.29
  12.46
  11.72
  11.04
  10.44
  9.90
  9.41
  8.97
  8.57
  8.21
  7.89
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.24
  6.12
  6.01
Revenue, $m
  18,940
  23,535
  28,791
  34,722
  41,333
  48,623
  56,584
  65,205
  74,471
  84,369
  94,883
  105,999
  117,706
  129,994
  142,857
  156,295
  170,307
  184,901
  200,085
  215,873
  232,283
  249,337
  267,058
  285,476
  304,623
  324,534
  345,248
  366,807
  389,255
  412,641
Variable operating expenses, $m
  15,817
  19,344
  23,378
  27,929
  33,003
  38,598
  44,708
  51,324
  58,436
  66,032
  72,819
  81,350
  90,335
  99,765
  109,638
  119,950
  130,704
  141,904
  153,558
  165,674
  178,269
  191,356
  204,957
  219,092
  233,787
  249,068
  264,965
  281,510
  298,738
  316,687
Fixed operating expenses, $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
Total operating expenses, $m
  15,817
  19,344
  23,378
  27,929
  33,003
  38,598
  44,708
  51,324
  58,436
  66,032
  72,819
  81,350
  90,335
  99,765
  109,638
  119,950
  130,704
  141,904
  153,558
  165,674
  178,269
  191,356
  204,957
  219,092
  233,787
  249,068
  264,965
  281,510
  298,738
  316,687
Operating income, $m
  3,123
  4,191
  5,413
  6,792
  8,330
  10,025
  11,876
  13,881
  16,036
  18,337
  22,064
  24,649
  27,371
  30,228
  33,220
  36,344
  39,603
  42,996
  46,527
  50,199
  54,015
  57,980
  62,101
  66,384
  70,836
  75,466
  80,283
  85,296
  90,517
  95,955
EBITDA, $m
  5,489
  6,821
  8,345
  10,064
  11,980
  14,093
  16,400
  18,899
  21,585
  24,453
  27,501
  30,723
  34,116
  37,677
  41,406
  45,300
  49,362
  53,591
  57,992
  62,568
  67,325
  72,267
  77,404
  82,742
  88,291
  94,062
  100,066
  106,314
  112,821
  119,599
Interest expense (income), $m
  154
  568
  800
  1,069
  1,377
  1,724
  2,112
  2,539
  3,006
  3,511
  4,054
  4,634
  5,250
  5,901
  6,588
  7,308
  8,061
  8,849
  9,670
  10,525
  11,415
  12,340
  13,302
  14,301
  15,340
  16,419
  17,541
  18,708
  19,922
  21,185
  22,501
Earnings before tax, $m
  2,554
  3,391
  4,344
  5,416
  6,605
  7,913
  9,337
  10,875
  12,525
  14,283
  17,430
  19,399
  21,470
  23,641
  25,912
  28,283
  30,754
  33,326
  36,002
  38,784
  41,674
  44,678
  47,800
  51,044
  54,417
  57,925
  61,575
  65,375
  69,331
  73,454
Tax expense, $m
  690
  916
  1,173
  1,462
  1,783
  2,137
  2,521
  2,936
  3,382
  3,857
  4,706
  5,238
  5,797
  6,383
  6,996
  7,636
  8,304
  8,998
  9,721
  10,472
  11,252
  12,063
  12,906
  13,782
  14,693
  15,640
  16,625
  17,651
  18,719
  19,833
Net income, $m
  1,865
  2,476
  3,171
  3,953
  4,822
  5,777
  6,816
  7,939
  9,143
  10,427
  12,724
  14,161
  15,673
  17,258
  18,916
  20,647
  22,450
  24,328
  26,281
  28,312
  30,422
  32,615
  34,894
  37,262
  39,725
  42,285
  44,950
  47,723
  50,612
  53,621

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  25,219
  31,338
  38,337
  46,234
  55,037
  64,744
  75,344
  86,824
  99,163
  112,343
  126,342
  141,144
  156,732
  173,094
  190,223
  208,115
  226,774
  246,206
  266,425
  287,448
  309,299
  332,006
  355,603
  380,128
  405,623
  432,136
  459,718
  488,424
  518,316
  549,456
Adjusted assets (=assets-cash), $m
  25,219
  31,338
  38,337
  46,234
  55,037
  64,744
  75,344
  86,824
  99,163
  112,343
  126,342
  141,144
  156,732
  173,094
  190,223
  208,115
  226,774
  246,206
  266,425
  287,448
  309,299
  332,006
  355,603
  380,128
  405,623
  432,136
  459,718
  488,424
  518,316
  549,456
Revenue / Adjusted assets
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
Average production assets, $m
  10,852
  13,485
  16,497
  19,896
  23,684
  27,861
  32,422
  37,362
  42,672
  48,344
  54,368
  60,738
  67,445
  74,486
  81,857
  89,557
  97,586
  105,948
  114,649
  123,695
  133,098
  142,870
  153,024
  163,578
  174,549
  185,958
  197,827
  210,180
  223,043
  236,443
Working capital, $m
  19
  24
  29
  35
  41
  49
  57
  65
  74
  84
  95
  106
  118
  130
  143
  156
  170
  185
  200
  216
  232
  249
  267
  285
  305
  325
  345
  367
  389
  413
Total debt, $m
  14,808
  19,794
  25,499
  31,935
  39,110
  47,021
  55,660
  65,015
  75,072
  85,813
  97,223
  109,287
  121,991
  135,326
  149,286
  163,868
  179,075
  194,912
  211,390
  228,524
  246,333
  264,839
  284,071
  304,058
  324,837
  346,445
  368,924
  392,320
  416,681
  442,061
Total liabilities, $m
  20,554
  25,540
  31,244
  37,681
  44,855
  52,766
  61,406
  70,761
  80,818
  91,559
  102,969
  115,032
  127,737
  141,072
  155,032
  169,614
  184,821
  200,658
  217,136
  234,270
  252,078
  270,585
  289,817
  309,804
  330,583
  352,191
  374,670
  398,066
  422,427
  447,806
Total equity, $m
  4,666
  5,797
  7,092
  8,553
  10,182
  11,978
  13,939
  16,062
  18,345
  20,783
  23,373
  26,112
  28,995
  32,022
  35,191
  38,501
  41,953
  45,548
  49,289
  53,178
  57,220
  61,421
  65,787
  70,324
  75,040
  79,945
  85,048
  90,358
  95,888
  101,649
Total liabilities and equity, $m
  25,220
  31,337
  38,336
  46,234
  55,037
  64,744
  75,345
  86,823
  99,163
  112,342
  126,342
  141,144
  156,732
  173,094
  190,223
  208,115
  226,774
  246,206
  266,425
  287,448
  309,298
  332,006
  355,604
  380,128
  405,623
  432,136
  459,718
  488,424
  518,315
  549,455
Debt-to-equity ratio
  3.170
  3.410
  3.600
  3.730
  3.840
  3.930
  3.990
  4.050
  4.090
  4.130
  4.160
  4.190
  4.210
  4.230
  4.240
  4.260
  4.270
  4.280
  4.290
  4.300
  4.300
  4.310
  4.320
  4.320
  4.330
  4.330
  4.340
  4.340
  4.350
  4.350
Adjusted equity ratio
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,865
  2,476
  3,171
  3,953
  4,822
  5,777
  6,816
  7,939
  9,143
  10,427
  12,724
  14,161
  15,673
  17,258
  18,916
  20,647
  22,450
  24,328
  26,281
  28,312
  30,422
  32,615
  34,894
  37,262
  39,725
  42,285
  44,950
  47,723
  50,612
  53,621
Depreciation, amort., depletion, $m
  2,367
  2,630
  2,931
  3,271
  3,650
  4,068
  4,524
  5,018
  5,549
  6,116
  5,437
  6,074
  6,745
  7,449
  8,186
  8,956
  9,759
  10,595
  11,465
  12,370
  13,310
  14,287
  15,302
  16,358
  17,455
  18,596
  19,783
  21,018
  22,304
  23,644
Funds from operations, $m
  4,232
  5,106
  6,103
  7,225
  8,472
  9,844
  11,340
  12,957
  14,692
  16,543
  18,161
  20,235
  22,417
  24,707
  27,102
  29,602
  32,209
  34,923
  37,746
  40,682
  43,732
  46,902
  50,196
  53,620
  57,179
  60,881
  64,733
  68,741
  72,916
  77,266
Change in working capital, $m
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  22
  23
Cash from operations, $m
  4,228
  5,101
  6,098
  7,219
  8,465
  9,837
  11,332
  12,948
  14,683
  16,533
  18,150
  20,224
  22,406
  24,694
  27,089
  29,589
  32,195
  34,908
  37,731
  40,666
  43,716
  46,885
  50,179
  53,602
  57,160
  60,861
  64,712
  68,720
  72,894
  77,242
Maintenance CAPEX, $m
  -859
  -1,085
  -1,349
  -1,650
  -1,990
  -2,368
  -2,786
  -3,242
  -3,736
  -4,267
  -4,834
  -5,437
  -6,074
  -6,745
  -7,449
  -8,186
  -8,956
  -9,759
  -10,595
  -11,465
  -12,370
  -13,310
  -14,287
  -15,302
  -16,358
  -17,455
  -18,596
  -19,783
  -21,018
  -22,304
New CAPEX, $m
  -2,267
  -2,633
  -3,012
  -3,399
  -3,788
  -4,177
  -4,562
  -4,940
  -5,310
  -5,671
  -6,024
  -6,370
  -6,708
  -7,041
  -7,371
  -7,700
  -8,029
  -8,362
  -8,700
  -9,047
  -9,403
  -9,772
  -10,154
  -10,554
  -10,971
  -11,409
  -11,869
  -12,353
  -12,863
  -13,400
Cash from investing activities, $m
  -3,126
  -3,718
  -4,361
  -5,049
  -5,778
  -6,545
  -7,348
  -8,182
  -9,046
  -9,938
  -10,858
  -11,807
  -12,782
  -13,786
  -14,820
  -15,886
  -16,985
  -18,121
  -19,295
  -20,512
  -21,773
  -23,082
  -24,441
  -25,856
  -27,329
  -28,864
  -30,465
  -32,136
  -33,881
  -35,704
Free cash flow, $m
  1,102
  1,383
  1,737
  2,170
  2,688
  3,292
  3,984
  4,766
  5,637
  6,594
  7,291
  8,417
  9,624
  10,909
  12,269
  13,704
  15,210
  16,788
  18,436
  20,154
  21,943
  23,804
  25,737
  27,746
  29,831
  31,997
  34,247
  36,584
  39,013
  41,538
Issuance/(repayment) of debt, $m
  4,287
  4,986
  5,704
  6,437
  7,175
  7,911
  8,639
  9,356
  10,057
  10,741
  11,410
  12,063
  12,704
  13,335
  13,960
  14,582
  15,207
  15,837
  16,478
  17,134
  17,809
  18,507
  19,232
  19,988
  20,779
  21,608
  22,479
  23,396
  24,361
  25,379
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  4,287
  4,986
  5,704
  6,437
  7,175
  7,911
  8,639
  9,356
  10,057
  10,741
  11,410
  12,063
  12,704
  13,335
  13,960
  14,582
  15,207
  15,837
  16,478
  17,134
  17,809
  18,507
  19,232
  19,988
  20,779
  21,608
  22,479
  23,396
  24,361
  25,379
Total cash flow (excl. dividends), $m
  5,390
  6,370
  7,441
  8,607
  9,862
  11,203
  12,624
  14,122
  15,693
  17,336
  18,701
  20,481
  22,328
  24,244
  26,229
  28,286
  30,417
  32,625
  34,914
  37,288
  39,752
  42,310
  44,969
  47,733
  50,610
  53,605
  56,726
  59,980
  63,374
  66,917
Retained Cash Flow (-), $m
  -974
  -1,132
  -1,295
  -1,461
  -1,629
  -1,796
  -1,961
  -2,124
  -2,283
  -2,438
  -2,590
  -2,738
  -2,884
  -3,027
  -3,169
  -3,310
  -3,452
  -3,595
  -3,740
  -3,889
  -4,042
  -4,201
  -4,365
  -4,537
  -4,717
  -4,905
  -5,103
  -5,311
  -5,530
  -5,761
Prev. year cash balance distribution, $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 flow adjustment, $m
  90
  114
  141
  173
  208
  248
  292
  340
  391
  447
  506
  569
  636
  706
  780
  857
  938
  1,022
  1,109
  1,201
  1,295
  1,394
  1,496
  1,602
  1,713
  1,828
  1,947
  2,071
  2,201
  2,336
Cash available for distribution, $m
  4,416
  5,238
  6,147
  7,146
  8,234
  9,407
  10,663
  11,998
  13,410
  14,898
  16,111
  17,743
  19,444
  21,217
  23,060
  24,976
  26,965
  29,030
  31,174
  33,399
  35,709
  38,109
  40,603
  43,196
  45,893
  48,700
  51,624
  54,669
  57,844
  61,156
Discount rate, %
  9.90
  10.40
  10.91
  11.46
  12.03
  12.64
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.83
  25.02
  26.27
  27.58
  28.96
  30.41
  31.93
  33.52
  35.20
  36.96
  38.81
  40.75
PV of cash for distribution, $m
  4,018
  4,298
  4,505
  4,630
  4,665
  4,607
  4,458
  4,227
  3,925
  3,570
  3,111
  2,715
  2,317
  1,932
  1,573
  1,250
  969
  732
  538
  384
  266
  179
  117
  74
  45
  26
  15
  8
  4
  2
Current shareholders' claim on cash, %
  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 36.4
Price to Sales 3.5
Price to Book 22
Price to Tangible Book
Price to Cash Flow 31.5
Price to Free Cash Flow 38.5
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 $14984 million for the last fiscal year's total revenue generated by Sherwin-Williams. The default revenue input number comes from 2017 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 26.4% 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 9.9%, 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 85.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% 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 0.6%.

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 57.3%.

Life of production assets of 10 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 0.1%. 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 - $3692 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 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 $41.7 billion.

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