Sherwin-Williams: 9 Different Insiders Have Sold Shares This Month

Feb.28.14 | About: The Sherwin-Williams (SHW)

In this article, I will feature one specialty chemicals company that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

The Sherwin-Williams Company (NYSE:SHW) engages in the development, manufacture, distribution, and sale of paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North America, South America, Europe, Asia, and the Caribbean region.

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Insider selling during the last 30 days

Here is a table of Sherwin-Williams' insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Robert Wells SVP Feb 25-26 7,576 No 17,826 shares 29.8%
Steven Oberfeld SVP Feb 25 34,419 No 95,262 shares + 8,123 options 25.0%
Allen Mistysyn VP Feb 24 1,792 No 18,009 shares 9.1%
Robert Davisson President, Paint Stores Group Feb 24 6,293 No 26,412 shares 19.2%
David Hodnik Director Feb 21 1,337 No 12,172 shares 9.9%
John Morikis COO Feb 14 38,623 No 105,033 shares 26.9%
Timothy Knight President, LACG Feb 14 28,950 No 37,536 shares 43.5%
Thomas Hopkins SVP Feb 13 15,373 No 57,862 shares + 1,377 options 20.6%
Sean Hennessy CFO Feb 13 30,623 No 92,332 shares + 1,377 options 24.6%
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There have been 164,986 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Sherwin-Williams' insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
February 2014 164,986 0
January 2014 0 0
December 2013 12,750 0
November 2013 18,000 0
October 2013 0 0
September 2013 0 0
August 2013 0 0
July 2013 0 0
June 2013 0 0
May 2013 10,191 0
April 2013 7,498 0
March 2013 62,929 0
February 2013 8,424 0
January 2013 0 0
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There have been 284,778 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of February 2014 has seen the most insider selling.

Financials

Sherwin-Williams reported the full-year 2013 financial results on January 30 with the following highlights:

Revenue $10.2 billion
Net income $752.6 million
Cash $744.9 million
Debt $1.7 billion
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Outlook

Sherwin-Williams' guidance is as follows:

Q1/2014 FY2014
Net sales growth 7%-12% 8%-13%
EPS $0.95-$1.15 $8.12-$8.32
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Competition

Sherwin-Williams' competitors include E. I. du Pont de Nemours and Company (NYSE:DD) and PPG Industries (NYSE:PPG). Here is a table comparing these companies.

Company SHW DD PPG Industry Average (Specialty Chemicals)
Market Cap: 19.78B 61.23B 26.83B 2.43B
Employees: N/A 64,000 41,400 41.40K
Qtrly Rev Growth (yoy): 0.11 0.05 0.14 0.02
Revenue: 10.19B 35.94B 15.11B 2.52B
Gross Margin: 0.45 0.37 0.43 0.29
EBITDA: 1.33B 5.87B 2.28B 425.80M
Operating Margin: 0.11 0.12 0.12 0.10
Net Income: 752.56M 2.84B 1.03B N/A
EPS: 7.26 5.18 22.27 2.21
P/E: 27.39 12.74 8.70 15.89
PEG (5 yr expected): 1.74 1.89 1.93 1.90
P/S: 1.93 1.69 1.77 1.09
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Sherwin-Williams has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
DD 0 97,145
PPG 0 160,927
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DuPont and PPG Industries have also seen intensive insider selling during the last 30 days.

Conclusion

There have been nine different insiders selling Sherwin-Williams, and there have not been any insiders buying Sherwin-Williams during the last 30 days. Seven of these nine insiders decreased their holdings by more than 10%. Sherwin-Williams has an insider ownership of 0.80%.

There are 11 analyst buy ratings, eight neutral ratings, and one sell rating with an average price target of $198.29. Before going short Sherwin-Williams, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are relatively high P/S ratio, bearish analyst price targets, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.