Sherwin-Williams: Great Business, Still Too Expensive

Jan. 27, 2023 1:01 PM ETThe Sherwin-Williams Company (SHW)HD, LOW7 Comments
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Weighing Machine


  • Sherwin-Williams shares declined 9% on Thursday after introducing disappointing 2023 profit guidance due to a slowdown in the US housing market.
  • Sherwin-Williams is a fantastic business with a dominant market position and excellent long-term financial performance.
  • Even after falling 9%, Sherwin-Williams shares remain expensive at 27x 2023e EPS.
  • Valuing the business at 22x 2024e EPS, I see fair value around $200 per share. As a value investor, I'd only be interested in shares below $145.

Paint brush dipping in paint

ChristopherBernard/iStock via Getty Images

Sherwin-Williams (NYSE:SHW) shares plunged 9% yesterday following a disappointing earnings report. The stock has sold off 23% over the past year, underperforming the broader market.

Sherwin-Williams has a dominant position in the US decorative paint business


Age of US Housing Stock over time (American Community Survey)


4Q22 Management Commentary (4Q22 Earnings Call Transcript from Seeking Alpha)


2023 Guidance (Seeking Alpha)

This article was written by

Weighing Machine profile picture
Former global buyside analyst/PM doing fundamental research for over a decade (2001-2012). Long term (5 year) time horizon when investing.

Disclosure: I/we have a beneficial long position in the shares of LOW either through stock ownership, options, or other derivatives. 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.

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