Stock Analysis | The Sherwin-Williams Outlook - A Cautious Technical Picture Amid Mixed Fundamentals

Market Snapshot: Rising Price But Weak Technicals Suggest Avoidance

Headline takeaway: The stock price of The Sherwin-Williams has risen by 4.92% recently, but our internal diagnostic score of 1.44 suggests a weak technical outlook and bears outweigh bulls by a large margin.

News Highlights: Industry Developments and Policy Shifts

1. Safex Chemicals Expands Manufacturing Capacity

On May 29, Safex Chemicals announced a new state-of-the-art facility in Gujarat, India, aiming to bolster production capacity and R&D innovation in crop protection. This news, while industry-focused, could indirectly affect materials and supply chain dynamics for companies like Sherwin-Williams.

2. U.S. Vaccine Policy Changes

A recent shift in U.S. policy regarding the approval and recommendations for COVID-19 vaccines was reported, highlighting potential impacts on public health and pharmaceutical supply chains. While not directly tied to Sherwin-Williams, this underscores broader uncertainty in public health regulations.

3. China-Related Export Restrictions

The U.S. announced new restrictions on shipments of chip design software and chemicals to China. These trade controls may affect global supply chains, including those in the industrial and construction sectors that Sherwin-Williams operates in.

Analyst Views & Fundamentals: Mixed Signals

The single analyst covering SHW has given it a "Neutral" rating. The average analyst rating is 3.00, and the performance-weighted rating is 1.65, showing some dispersion in expectations. These scores contrast with the recent 4.92% price rise, indicating a lack of alignment between sentiment and performance.

Here are some key fundamentals with their internal diagnostic scores (0-10):

• Price-to-Earnings (PE) Ratio: 42.27 (Score: 2.67)
• Cash Flow from Operating Activities (CFOA): 0.0439 (Score: 2.22)
• Revenue-to-Market Value (Revenue-MV): 0.8662 (Score: 2.00)
• Net Cash Flow from Operating Activities (YoY growth rate %): -8.09% (Score: 1.96)
• Quick Ratio: 48.08% (Score: 1.90)
• Current Ratio: 78.39% (Score: 1.89)
• Total Profit / EBIT (%): 88.62% (Score: 2.13)

Money-Flow Trends: Mixed Institutional Behavior

While small retail investors have shown a positive trend, larger funds are moving in the opposite direction. The overall inflow ratio is at 48.06%, with large and extra-large funds showing negative trends. The inflow ratio breakdown is as follows:

• Small investors: 51.55%
• Medium investors: 50.72%
• Large investors: 48.57%
• Extra-large investors: 46.97%

With an overall internal diagnostic score of 7.75 (rated as "good"), the mixed inflows suggest caution for short-term traders.

Key Technical Signals: Overbought and Bearish Patterns

Sherwin-Williams is showing a heavily bearish technical profile with 6 out of 6 indicators pointing to weakness. The internal diagnostic score is 1.44.

• Relative Strength Index (RSI) Overbought: Score 1.00 – a bearish signal historically with a win rate of 0.0%.
• Williams %R (WR) Overbought: Score 2.41 – indicating a neutral rise but with a 47.89% win rate.
• Ex-Dividend Date: Score 1.00 – bearish with a 33.33% win rate.
• Dividend Record Date: Score 1.00 – bearish with a 33.33% win rate.
• Bullish Engulfing: Score 1.00 – a bearish reversal pattern with a 33.33% win rate.
• Marubozu White: Score 2.23 – bearish trend, 37.5% win rate.

Recent chart patterns from August 13-19 reveal overbought conditions, including multiple WR and RSI signals, along with a Bearish Engulfing pattern. This suggests a weakening trend and a high risk of decline.

Conclusion

With an internal diagnostic score of 1.44 on the technical side and mixed inflow patterns from large funds, Sherwin-Williams appears to be in a vulnerable position. While the fundamentals remain mixed and the market continues to react to broader geopolitical and policy shifts, investors should consider waiting for a clearer trend or more favorable technical conditions before taking a position. For now, a cautious approach is warranted.