sherwin williams
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SHW: Financial AnalysisTRANSCRIPT
SHERWIN-WILLIAMS (SHW)By Nick Elhart
Introduction
“Since its founding by Henry Sherwin and Edward Williams in 1866, The Sherwin-Williams Company has not only grown to be the largest producer of paints and coatings in the United States, but is among the largest producers in the world.” http://www2.sherwin-williams.com/about/
About Sherwin-Williams
Founded in 1866 in Cleveland, OH: that’s 143 years in business!
Ranked 316 on the 2008 Fortune 500 list
Have over 3000 paint stores, 100 spray-service stores
30,700 employees
Mission
“….to lead our industry, to manufacture and market innovative products of superior quality, to operate a safe, clean and friendly workplace, to observe the highest ethical standards in business conduct and to reward our investors.” (http://www2.sherwin-williams.com/about/)
The Center of Excellence
http://excellence.sherwin.com/
In the 6000 square foot space, seven three-dimensional exhibit areas feature images, text, sound, video and memorabilia.
U.S. Existing Home SalesSeasonally Adjusted
Source: National Association of Realtors
0
1000
2000
3000
4000
5000
6000
7000
8000
. Jun-01
Dec-01
Jun-02
Dec-02
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Sale
s in
Thousa
nds
of
Unit
s
% C
hange o
ver
Pre
vio
us
Year
Industry Analysis
Sector: Basic Materials Industry: Chemical: Major-Diversified
Coatings IndustryTop Manufacturers
Source: Coatings World
1 Sherwin-Williams 2 PPG 3 Valspar 4 Masco 5 ICI 6 DuPont 7 RPM 8 Comex 9 Akzo Nobel 10 Benjamin Moore
1 Akzo Nobel/ICI 2 PPG/SigmaKalon
3 Sherwin-Williams
4 Dupont 5 Valspar 6 RPM 7 BASF 8 Kansai 9 Nippon10 Sika
Worldwide United States
Source: Paint & Coatings Industry
Coatings IndustryGlobal Demand
7.3 Billion Gallons81 Billion Dollars
United States 26%
Latin America 11%
Europe 32%
Asia Pacific 23%
Canada 4%
Other 4%
Source: U.S. Census Bureau, July 2007/CHEMARK
2008 Revenues (millions)
PPG: $15,849.00 SHW: $7,979.73 VAL: $3,482.38
Capital Structure
55%
24%
20%
Capital Structure of Sherwin Williams
Assets LiabilitiesStockholders Equity
Debt to Asset Ratio
0%
5%
10%
15%
20%
25%
30%
2006 2007 2008
Sherwin Williams
Valspar
PPG
Gross Profit Margin
0.00%5.00%
10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%50.00%
2006 2007 2008
Sherwin Williams
Valspar
PPG
Net Profit Margin
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
2006 2007 2008
Sherwin Williams
Valspar
PPG
Profitability Ratios 2008
ROA ROI ROE0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Sherwin WilliamsValsparPPG
Liquidity Ratios 2008
0
0.5
1
1.5
2
Quick Ratio Current Ratio
Sherwin-Williams
Valspar
PPG
Average Collection Period
0
10
20
30
40
50
60
70
80
2006 2007 2008
Sherwin Williams
Valspar
PPG
Inventory Turnover
0.001.002.003.004.005.006.007.008.009.00
10.00
2008 2007 2006
Sherwin Williams
PPG
Valspar
Weaknesses
Not very “liquid.” Poor Inventory Turnover ratio Current housing industry
Strengths
Great debt to asset ratio Great average collection period Superior net and gross profit margins Superior profitability ratios: ROE,
ROI, ROA Established: 143 years-young
Recommendations
BUY! HOLD IF YOU OWN!
The housing market is expected to bounce back this year.
Sources
http://excellence.sherwin.com/ http://www.sherwin-williams.com/ National Association of Realtors Coatings World Paint and Coatings Industry Google Finance