SHERWIN-WILLIAMS (SHW)By Nick Elhart

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 SalesSeasonally Adjusted

Source: National Association of Realtors

0

1000

2000

3000

4000

5000

6000

7000

8000

. Jun-01

Dec-01

Jun-02

Dec-02

Jun-03

Dec-03

Jun-04

Dec-04

Jun-05

Dec-05

Jun-06

Dec-06

Jun-07

Dec-07

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Sale

s in

Thousa

nds

of

Unit

s

% C

hange o

ver

Pre

vio

us

Year

Industry Analysis

Sector: Basic Materials Industry: Chemical: Major-Diversified

Coatings IndustryTop Manufacturers

Source: Coatings World

1 Sherwin-Williams 2 PPG 3 Valspar 4 Masco 5 ICI 6 DuPont 7 RPM 8 Comex 9 Akzo Nobel 10 Benjamin Moore

1 Akzo Nobel/ICI 2 PPG/SigmaKalon

3 Sherwin-Williams

4 Dupont 5 Valspar 6 RPM 7 BASF 8 Kansai 9 Nippon10 Sika

Worldwide United States

Source: Paint & Coatings Industry

Coatings IndustryGlobal Demand

7.3 Billion Gallons81 Billion Dollars

United States 26%

Latin America 11%

Europe 32%

Asia Pacific 23%

Canada 4%

Other 4%

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

55%

24%

20%

Capital Structure of Sherwin Williams

Assets LiabilitiesStockholders Equity

Debt to Asset Ratio

0%

5%

10%

15%

20%

25%

30%

2006 2007 2008

Sherwin Williams

Valspar

PPG

Gross Profit Margin

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%50.00%

2006 2007 2008

Sherwin Williams

Valspar

PPG

Net Profit Margin

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

2006 2007 2008

Sherwin Williams

Valspar

PPG

Profitability Ratios 2008

ROA ROI ROE0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Sherwin WilliamsValsparPPG

Liquidity Ratios 2008

0

0.5

1

1.5

2

Quick Ratio Current Ratio

Sherwin-Williams

Valspar

PPG

Average Collection Period

0

10

20

30

40

50

60

70

80

2006 2007 2008

Sherwin Williams

Valspar

PPG

Inventory Turnover

0.001.002.003.004.005.006.007.008.009.00

10.00

2008 2007 2006

Sherwin Williams

PPG

Valspar

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