The Sherwin-Williams Outlook - A Technical Downturn Amid Mixed Fundamentals

1. Market Snapshot

Headline Takeaway: The stock of The Sherwin-Williams (SHW) is in a weak technical position with a score of 3.19 (internal diagnostic score, 0-10), and recent price trends show a drop of 1.57%.

Suggested stance: Based on the bearish signals and weak technicals, investors are advised to avoid entry or consider hedging short-term positions.

2. News Highlights

While the news directly about SHW is sparse, broader economic and policy developments could indirectly influence the market:

• U.S. Vaccine Policy Shifts: The U.S. Department of Health and Human Services made significant changes to how vaccines are approved and recommended, which could affect broader market sentiment and consumer behavior, including retail and industrial sectors.
• China’s Factory Activity Slows: China’s purchasing managers index rose slightly to 49.5 in May (from 49.0 in April), still below the 50 threshold for contraction. This suggests weak global demand for industrial and construction materials, a key market for Sherwin-Williams.
• Crypto ETF Developments: REX Shares filed for Ethereum and Solana ETFs that aim to comply with new SEC staking guidelines. While not directly related to SHW, these developments may shift capital flows in and out of risk-on sectors like industrials, depending on regulatory and market acceptance.

3. Analyst Views & Fundamentals

Analysts remain divided, with 1 "Buy" and 1 "Neutral" recommendation in the last 20 days. The simple average rating is 3.50, while the weighted performance-based rating is 2.67, indicating lower confidence in the bullish view.

Key fundamental factors and model scores:

• Net Cash Flow from Operating Activities per Share (YoY Growth Rate %): -7.01% – Score: 3 (internal diagnostic score).
• PCF (Price to Cash Flow): 28.67 – Score: 0.
• PE (Price to Earnings): 42.27 – Score: 2.
• Total Profit / EBIT (%): 88.62% – Score: 2.
• Net Cash Flow from Operating Activities (YoY Growth Rate %): -8.09% – Score: 3.
• Cash-UP (Cash to Enterprise Value): 0.24 – Score: 2.
• CFOA (Cash Flow to Operating Assets): 0.04 – Score: 3.
• Total Assets Turnover Ratio: 0.47 – Score: 2.
• Cost of Sales Ratio (%): 51.14% – Score: 1.
• Cash-MV (Cash to Market Value): 0.65 – Score: 2.

The overall fundamental score is 5.69 (internal diagnostic score, 0-10), which is moderate but does not support a strong bullish stance, especially when weighed against the bearish technicals.

4. Money-Flow Trends

The latest fund-flow analysis shows mixed patterns:

• Small investors are showing a positive trend with an inflow ratio of 0.5069.
• Large and extra-large investors are negative, with inflow ratios at 0.4834 and 0.4861, respectively.
• Overall inflow ratio stands at 0.4879 with an overall negative trend.
• Fund-flow score: 7.8 (internal diagnostic score, 0-10) – This suggests some short-term retail buying is occurring but is not enough to offset large investor selling.

The pattern points to a divergence between retail and institutional flows, with big money likely exiting the stock, while smaller investors are cautiously entering. This divergence could hint at a short-term bottoming process or a temporary bounce.

5. Key Technical Signals

The technical outlook for SHW is clearly bearish, with 5 bearish indicators and 0 bullish ones, suggesting a high risk of continued downward pressure.

• WR Overbought – Score: 1.7 (internal diagnostic score, 0-10). Indicates weak momentum, with a 43.75% win rate and average return of -0.73% historically.
• WR Oversold – Score: 6.8 – Suggests brief positive momentum but has mixed historical returns.
• MACD Death Cross – Score: 3.1 – A bearish signal with 45.45% win rate and 0.19% average return.
• MACD Golden Cross – Score: 3.96 – A bullish signal, but with 50% win rate and 0.58% average return, indicating it has not been consistently reliable.
• Dividend Payable Date – Score: 1.0 – Historically associated with 0% win rate and -2.4% average return. A clear bearish trigger.
• Bullish Engulfing – Score: 2.67 – Mixed performance, with a 45.45% win rate and -0.57% average return.

Key Recent Chart Patterns (Last 5 Days):

• 2025-09-08: WR Overbought + MACD Golden Cross.
• 2025-09-09: WR Oversold + MACD Death Cross.
• 2025-09-05: Dividend Payable Date.

This mix of conflicting signals and overbought/oversold swings suggests a volatile market with no clear direction. The overall trend is weak and bearish.

6. Conclusion

Actionable Takeaway: With a technical score of 3.19 (internal diagnostic score, 0-10) and 5 bearish indicators, SHW is currently not a buy. Retail inflows suggest some short-term optimism, but institutional outflows indicate caution. Investors are advised to wait for a clearer trend or a pullback with stronger confirmation—ideally after the dividend date and any earnings release that may clarify the company's trajectory.