Stock Analysis | The Sherwin-Williams Outlook - A Bearish Technical Picture but Strong Fundamentals

Market Snapshot

Takeaway: Despite a 5.18% recent price rise, internal technical signals are bearish, while fundamentals remain strong.

News Highlights

• Safex Chemicals Expands Manufacturing – Safex Chemicals announced a new state-of-the-art manufacturing facility in Bharuch, Gujarat, which will bolster production capacity, create 300 direct jobs, and scale to 80 MT per day. While not directly related to Sherwin-Williams, it signals industry-level growth in chemical manufacturing.
• U.S. Policy Shift on China Shipments – New U.S. restrictions on chip design software and chemicals shipments to China aim to choke key sectors. Any ripple effects could impact global supply chains, including those of industrial paint and coatings companies like Sherwin-Williams.
• ETF Growth in Asia Pacific – ETFGI reported that assets invested in the ETFs industry in Asia Pacific (excluding Japan) hit a record $1.25 trillion at the end of April. Broader market confidence in Asia could indirectly benefit SHW by boosting global demand for industrial goods.

Analyst Views & Fundamentals

The current average analyst rating for Sherwin-Williams is 3.00, while the performance-weighted (historical) rating is 1.65. Analyst ratings are not consistent – recent sentiment appears mixed, with B of A Securities issuing a Neutral rating. This contrasts with the recent 5.18% price rise.

Key fundamental factors and their values (with internal diagnostic scores in parentheses):

• Net Cash Flow from Operating Activities per Share (YoY Growth Rate): -7.01% (Score: 3) – A weak cash flow growth rate signals caution.
• PE Ratio: 42.27 (Score: 2) – Elevated valuation raises concerns about near-term risk.
• Total Profit / EBIT: 88.62% (Score: 2) – A high proportion suggests healthy operating leverage and profitability.
• Cost of Sales Ratio: 51.14% (Score: 1) – A high cost ratio is a red flag for efficiency.
• Total Assets Turnover Ratio: 47.43% (Score: 2) – Suggests only moderate asset efficiency.
• Current Ratio: 78.39% (Score: 1) – Suggests a weak short-term liquidity position.

Money-Flow Trends

Recent fund-flow data shows a negative overall trend despite positive inflows from retail investors. Large institutional investors are pulling back, with the large and extra-large inflow ratios below 50% (48.48% and 47.71%, respectively). In contrast, small investors show strong interest, with inflow ratios above 50%. This divergence suggests caution by institutional players, while retail sentiment remains positive.

Key Technical Signals

Technically, SHW is in a weak state, with a technical score of 2.22 and a bearish outlook. Here are the key indicators and their internal diagnostic scores (0–10):

• WR Overbought: 2.17 – Caution is warranted as the Williams %R is signaling overbought conditions.
• RSI Overbought: 1.00 – A red flag, with RSI indicating overbought conditions and no recent positive returns.
• Ex-Dividend Date: 3.47 – Neutral impact, historically averaging -0.79% returns.
• Dividend Record Date: 3.47 – Similarly, the impact appears neutral.
• Bullish Engulfing: 1.00 – A bearish signal, with only a 33% win rate historically.
• Marubozu White: 2.23 – Mixed signal, with a 37.5% win rate but an average return of 0.75%.

Recent Chart Patterns – Over the last five days, bearish signals have dominated: - 2025-08-19: WR Overbought, Bullish Engulfing, and Marubozu White patterns emerged, all leaning bearish. - 2025-08-13 and 2025-08-14: WR Overbought signaled overbought conditions. - 2025-08-15: Ex-Dividend and Dividend Record Date events showed no strong directional bias.

Key Insights: Technical indicators are bearish, with 6 negative vs. 0 positive signals. The trend remains weak, and a pull-back appears likely.

Conclusion

Sherwin-Williams’ fundamentals remain robust, but technical indicators are currently bearish with a score of 2.22. Fund flows show divergence between retail and institutional sentiment, and analyst ratings are mixed. Given the bearish technical outlook, investors may want to consider waiting for a clearer trend or improved momentum before entering a position.