Company Description: Sherwin-Williams Co (SHW) is the largest U.S. producer of paints, is also a major seller of wallcoverings and related products primarily in North and South America with additional operations in the United Kingdom, Europe, India and China.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
- Avg. High Yield Price
- 20-Year DCF Price
- Avg. P/E Price
- Graham Number
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
- Rolling 4-yr Div. > 15%
- Dividend Growth Rate
- Years of Div. Growth
- 1-Yr. > 5-Yr Growth
- Payout 15% of avg.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:
- NPV MMA Diff.
- Years to >MMA.
Other: SHW is both an S&P 500 Dividend Aristocrat and a member of The Broad Dividend Achievers™ Index. SHW's business is cyclical in nature. It relies primarily on new housing starts and remodeling. From a risk perspective, SHW is exposed to lead pigment litigation. However, with the Rhode Island Supreme Court overturning a verdict against SHW relating to lead paint, makes future negative rulings less likely.
Conclusion: SHW earned a Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and one Star in the Dividend Income vs. MMA section for a net total of 3 Stars. This quantitatively rates SHW as a 3 Star-Hold.
Using my D4L-PreScreen.xls model, I determined the share price could go up to $54.22 before SHW's NPV MMA Diff. drops to the $3,000 NPV MMA Diff. I like to see. At that price SHW would yield 2.58%. I have added SHW to my watch list.
Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I do not own shares of SHW (0.0% of my Income Portfolio).
What are your thoughts on SHW?
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