QS Research · Michael Burry's Scion Capital analyst template · 2006
SHERWIN WILLIAMS CO (SHW)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +4% · downside -14% · upside +14%
The market is paying 19.8x EV/EBITDA and 31.1x P/E (N28, N31) for a business whose Q3 2026 sales rose 7.9% to $6.860B but whose net income fell 1.5% to $821.0M and whose segment margins all compressed (S29, S31) - the premium is unearned on the comp table, where the closest match RPM is 13.7x EV/EBITDA and 19.2x P/E (S1). But the rules bind me to SHW's own multiple today, and at 19.8x on the TTM base of $4.78B EBITDA (N15), $11.53B net debt (N24) and 241.59M shares (N5) the whole outcome range is EBITDA-driven and narrow: +4% EBITDA gives about $360 (+4.5%), +12% about $391 (+13.6%), -12% about $297 (-13.7%). A long needs +30%, i.e. EBITDA of ~$6.2B, which neither the trimmed FY2026 diluted EPS range of $10.92-$11.22 (S100) nor management's talk of muted demand into 2027 supports; a short needs -30%, which can only come from a de-rating to peer multiples - and no cited non-valuation catalyst forces that, so I cannot put it in the cases. This is a fairly priced, high-quality compounder with a margin problem and a full multiple: no edge either way, but the 19.8x vs 13.7x gap is the thing to watch.
Key numbers
- Share price: $344.10
- Market cap: $83.13B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $24.91B
- EV / EBITDA (TTM): 19.8x
- P/E (TTM): 31.1x
- Price / book: 20.90x
The 15 boxes
- ✓ 1. Long-form business notes
Sherwin-Williams is a vertically integrated paint and coatings maker that sells mostly through its own 4,853-store North American specialty chain (Paint Stores Group), with a manufacturing/wholesale arm (Consumer Brands Group, 307 Latin America stores) that supplies those stores, and a worldwide industrial coatings arm (Performance Coatings Group, 317 branches), all as of December 31, 2025. Between the FY2020 and FY2025 10-Ks the store footprint was reorganized: the old 'The Americas Group' of 4,774 stores was split into Paint Stores Group (US/Canada/Caribbean) plus the Consumer Brands Group's Latin America stores, and intersegment transfers from Consumer Brands rose to approximately 63% of that segment's 2025 sales from approximately 55% in 2020. Revenue grew from $18.36B in FY2020 to $23.57B in FY2025 with gross profit of $11.52B and net income of $2.57B in FY2025, while capital spending rose from $303.8M to $797.6M (peak $1.07B in FY2024).
- ✓ 2. Competitive advantage
SHW shows scale and cash generation but the supplied filings do not quantify a durable moat. FY2025 revenue was $23.57B, gross profit $11.52B, operating cash flow $3.45B, and net income $2.57B, below FY2024 net income of $2.68B. Competition is described as broad across all segments, with product quality, innovation, breadth, technical expertise, service, distribution and price as key factors; the 10-K says competitive position varies by product and market.
- ✓ 3. 10-Q takeaways
Q3 2026 sales rose 7.9% to $6.860B, with Paint Stores same-store sales up 3.9%, but gross margin fell to 47.8% from 49.2% on raw material/supply-chain costs and mix, including Suvinil dilution. Diluted EPS rose 0.9% to $3.38 and adjusted EPS rose 1.1% to $3.63, while net income fell 1.5% to $821.0M. Nine-month operating cash was $2.591B, buybacks were 7.1M shares, and FY2026 adjusted EPS guidance is $11.85-$12.15.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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