From Nasdaq: 2025-05-30 05:39:00

Sherwin-Williams Co (NYSE: SHW) stock has surged 18% in the last year, outperforming the S&P 500. However, at $359 per share, it may be overvalued, trading at 28 times its free cash flow. With revenue growth around 5%, the high multiple raises concerns about a potential correction of 20-30%.

Sherwin-Williams’ high valuation is supported by record sales of $23.10 billion in 2024, with net income per share up 14.1% and adjusted EBITDA rising 6.0%. The company has expanded its retail footprint, implemented cost-saving initiatives, and maintained strong cash flow, returning $2.46 billion to shareholders.

Despite strong fundamentals, Sherwin-Williams recently forecast lower profits due to soft demand in key markets. Rising raw material prices pose a challenge, potentially impacting margins. The company’s exposure to cyclical industries and competitive markets could hinder its ability to maintain growth and pass on higher costs.

Despite challenges, Sherwin-Williams remains the largest paint and coatings company in the U.S., with a leading position in the professional paint market. Long-term demand for housing and urban development supports its growth, along with a steady demand for repaint and maintenance. Investing in a diversified portfolio like the Trefis High Quality (HQ) Portfolio may offer more stability and better returns.



Read more at Nasdaq: Is Sherwin-Williams Stock Overvalued At $360?