Stock Analysis | The Sherwin-Williams Outlook - Mixed Signals and a Bearish Technical Outlook

Market Snapshot

Headline Takeaway: The Sherwin-Williams (SHW) is currently experiencing a 1.95% rise, but technical indicators are overwhelmingly bearish, suggesting caution for investors.

News Highlights

• Safex Chemicals Expands Manufacturing Footprint (May 29): Safex Chemicals announced a new facility in Gujarat that is expected to increase production and create 300 new jobs. While this does not directly affect SHW, it reflects a positive trend in the chemical manufacturing sector, which could indirectly benefit SHW as a competitor.
• U.S. Visa Policy Affects Chinese Students (May 28): The U.S. is expected to revoke visas for some Chinese students, potentially affecting global mobility and economic trends. This could impact global markets, including sectors that SHW operates in, like coatings and specialty chemicals.
• ETF Assets in Asia Pacific Reach Record High (May 31): ETFGI reported that assets in the Asia Pacific region (excluding Japan) hit $1.25 trillion, a sign of strong investor interest in diversified, liquid funds. While not directly related to SHW, this indicates broader market activity that could influence investor sentiment.

Analyst Views & Fundamentals

The average rating from analysts is 3.50, while the performance-weighted rating is 3.24. Analysts appear to be in consistent agreement with a mix of "Buy" and "Neutral" ratings in the last 20 days. However, this consensus does not align well with the current price trend of a 1.95% rise. The divergence suggests uncertainty about SHW's medium-term direction.

• PE Ratio: 42.27 (value: 42.2695) - internal diagnostic score: 2
• Net Cash Flow from Operating Activities per Share (YoY Growth Rate %): -7.01% (value: -7.0076) - internal diagnostic score: 3
• Fixed Assets Turnover Ratio: 3.17 (value: 3.1667) - internal diagnostic score: 3
• Cash-UP: 24.16% (value: 0.24157414443337227) - internal diagnostic score: 1
• Total Profit / EBIT (%): 88.62% (value: 88.6167) - internal diagnostic score: 2

Money-Flow Trends

Big-money flows are showing a negative trend, with large and extra-large institutional investors pulling back. Specifically, large and extra-large inflow ratios are below 50% (47.46% and 47.04%, respectively), while small and medium flows are still positive, at 50.92% and 50.48%. This suggests that institutional investors are cautious, while retail or smaller investors remain optimistic. The overall inflow ratio stands at 47.68%, signaling a slightly bearish sentiment among big players.

Key Technical Signals

Despite a small rise in the past five days, technical indicators are overwhelmingly bearish. The technical score is 3.2, which is considered weak. Bearish indicators outnumber bullish ones by a wide margin (6 to 0), and the trend is unclear due to mixed signals. Key patterns include a MACD Death Cross on August 29 and Bullish Engulfing on August 19, which created conflicting signals.

• MACD Death Cross: internal diagnostic score: 2.21 - a bearish signal with a low win rate of 40%
• Bearish Engulfing: internal diagnostic score: 6.13 - a relatively strong bearish signal with a 61.54% win rate
• WR Overbought: internal diagnostic score: 2.13 - suggesting overbought conditions but low confidence

Other signals like Ex-Dividend Date and Dividend Record Date occurred on August 15, which may have influenced small investors but not the broader trend.

Conclusion

While SHW recently saw a price increase, the technical outlook is bearish, and big-money flows are pulling back. With no bullish signals to support a rebound and 6 out of 7 indicators bearish, investors may want to consider waiting for a pull-back or reassessing their exposure to SHW in the near term. For now, the internal diagnostic scores suggest that the fundamentals and market sentiment are not in sync, and caution is warranted.