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SHW: Financial Analysis

SHW: Financial Analysis

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Sherwin Williams Sherwin Williams Presentation Transcript

  • By Nick Elhart SHERWIN-WILLIAMS (SHW)
  • Introduction “Since its founding by Henry Sherwin and Edward Williams in 1866, The Sherwin-Williams Company has not only grown to be the largest producer of paints and coatings in the United States, but is among the largest producers in the world.” http://www2.sherwin- williams.com/about/
  • About Sherwin-Williams  Founded in 1866 in Cleveland, OH: that’s 143 years in business!  Ranked 316 on the 2008 Fortune 500 list  Have over 3000 paint stores, 100 spray- service stores  30,700 employees
  • Mission  “….to lead our industry, to manufacture and market innovative products of superior quality, to operate a safe, clean and friendly workplace, to observe the highest ethical standards in business conduct and to reward our investors.” (http://www2.sherwin- williams.com/about/)
  • The Center of Excellence  http://excellence.sherwin.com/  In the 6000 square foot space, seven three- dimensional exhibit areas feature images, text, sound, video and memorabilia.
  • U.S. Existing Home Sales Seasonally Adjusted 25% 8000 20% 7000 15% % Change over Previous Year Sales in Thousands of Units 6000 10% 5000 5% 0% 4000 -5% 3000 -10% 2000 -15% 1000 -20% -25% 0 . Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- 01 01 02 02 03 03 04 04 05 05 06 06 07 07 Source: National Association of Realtors
  • Industry Analysis  Sector: Basic Materials  Industry: Chemical: Major-Diversified
  • Coatings Industry Top Manufacturers United States Worldwide 1 Akzo Nobel/ICI 1 Sherwin-Williams 2 PPG/SigmaKalon 2 PPG 3 Sherwin-Williams 3 Valspar 4 Dupont 4 Masco 5 Valspar 5 ICI 6 RPM 6 DuPont 7 BASF 7 RPM 8 Kansai 8 Comex 9 Nippon 9 Akzo Nobel 10 Sika 10 Benjamin Moore Source: Paint & Coatings Industry Source: Coatings World
  • Coatings Industry Global Demand Asia Pacific Europe 7.3 Billion Gallons 23% 32% 81 Billion Dollars Latin America 11% Other 4% Canada 4% United States 26% Source: U.S. Census Bureau, July 2007/CHEMARK
  • 2008 Revenues (millions)  PPG: $15,849.00  SHW: $7,979.73  VAL: $3,482.38
  • Capital Structure Capital Structure of Sherwin Williams Assets Liabilities Stockholders Equity 20% 24% 56%
  • Debt to Asset Ratio 30% 25% 20% Sherwin Williams 15% Valspar PPG 10% 5% 0% 2006 2007 2008
  • Gross Profit Margin 50.00% 45.00% 40.00% 35.00% 30.00% Sherwin Williams 25.00% Valspar 20.00% PPG 15.00% 10.00% 5.00% 0.00% 2006 2007 2008
  • Net Profit Margin 8.00% 7.00% Sherwin 6.00% Williams 5.00% Valspar 4.00% 3.00% PPG 2.00% 1.00% 0.00% 2006 2007 2008
  • Profitability Ratios 2008 30.00% 25.00% 20.00% Sherwin Williams 15.00% Valspar PPG 10.00% 5.00% 0.00% ROA ROI ROE
  • Liquidity Ratios 2008 2 1.5 Sherwin -Williams 1 Valspar PPG 0.5 0 QuickRatio CurrentRatio
  • Average Collection Period 80 70 60 50 Sherwin Williams 40 Valspar 30 PPG 20 10 0 2006 2007 2008
  • Inventory Turnover 10.00 9.00 8.00 Sherwin 7.00 Williams 6.00 5.00 PPG 4.00 3.00 Valspar 2.00 1.00 0.00 2008 2007 2006
  • Weaknesses  Not very “liquid.”  Poor Inventory Turnover ratio  Current housing industry
  • Strengths  Great debt to asset ratio  Great average collection period  Superior net and gross profit margins  Superior profitability ratios: ROE, ROI, ROA  Established: 143 years-young 
  • Recommendations  BUY!  HOLD IF YOU OWN!  The housing market is expected to bounce back this year.
  • Sources  http://excellence.sherwin.com/  http://www.sherwin-williams.com/  National Association of Realtors  Coatings World  Paint and Coatings Industry  Google Finance