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The Sherwin-Williams Company (NYSE:SHW): Will The Growth Last?

Simply Wall St

In June 2019, The Sherwin-Williams Company (NYSE:SHW) announced its earnings update. Overall, it seems that analyst forecasts are substantially optimistic, with earnings expected to grow by a high double-digit of 59% in the upcoming year, compared with the previous 5-year average growth rate of 12%. Presently, with latest-twelve-month earnings at US$1.1b, we should see this growing to US$1.8b by 2020. Below is a brief commentary on the longer term outlook the market has for Sherwin-Williams. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Sherwin-Williams

What can we expect from Sherwin-Williams in the longer term?

Over the next three years, it seems the consensus view of the 23 analysts covering SHW is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for SHW, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NYSE:SHW Past and Future Earnings, September 10th 2019

This results in an annual growth rate of 12% based on the most recent earnings level of US$1.1b to the final forecast of US$2.2b by 2022. This leads to an EPS of $24.15 in the final year of projections relative to the current EPS of $11.92. In 2022, SHW's profit margin will have expanded from 6.3% to 11%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Sherwin-Williams, I've put together three essential aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Sherwin-Williams worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Sherwin-Williams is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sherwin-Williams? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.