Is Sherwin-Williams Co (SHW) overvalued?
On Equity Rank's model estimate, SHW trades 43% above its fair value. Sherwin-Williams Co (SHW) last closed at $344.10; the multi-method model fair value is $240.54.
| Price | Model fair value | Price vs model |
|---|---|---|
| $344.10 | $240.54 | 43% above |
What the answer rests on
- 0 of 10 valuation methods put SHW's value above its price and 10 put it below, so the methods mostly agree.
- To justify today's price, SHW's free cash flow would need to grow about 13.3% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 27.7% a year.
- SHW trades at 33.4 times its last year's earnings, against a median of 26.4 for 26 profitable Specialty Chemicals companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 10% above to 46% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind SHW's fair value · What prices assume · Other companies