Stock Analysis | The Sherwin-Williams Outlook - Mixed Signals Amid Weak Technicals and Strong Fundamentals

Market Snapshot: Bearish Technicals and Volatility Weigh on Investor Confidence

Takeaway: The technical outlook for The Sherwin-Williams is bearish, with six negative indicators outperforming zero bullish ones, and the stock has fallen by 1.91% recently. Investors are advised to avoid it at this time. Internal diagnostic score for technicals: 3.2 (weak).

News Highlights: Global Developments and Sector Innovations

• May 29, 2025 - Safex Chemicals Expansion: Safex Chemicals announced a new state-of-the-art facility in Gujarat, India, to enhance production capacity and R&D innovation in crop protection. This could indirectly benefit chemical suppliers and industrial players like Sherwin-Williams, though the direct impact is minimal.
• May 31, 2025 - ETF Growth in Asia-Pacific: Assets in ETFs across the Asia-Pacific region (excluding Japan) hit a record $1.25 trillion, signaling strong investor appetite for diversified exposure. This could support broader market stability, but it doesn’t directly influence Sherwin-Williams' performance.
• May 30, 2025 - TotalEnergies and RGE Solar Project: A new large-scale solar and battery storage project in Indonesia and Singapore could indirectly benefit industrial and construction sectors. While not directly tied to Sherwin-Williams, it reinforces long-term trends in infrastructure and energy sectors that may influence demand for paints and coatings in the future.

Analyst Views & Fundamentals: Mixed Consensus and Strong Cash Flow

Two analysts, Greg Melich (Evercore ISI Group) and Steve Byrne (B of A Securities), have offered their views in the past 20 days. The simple average of their ratings is 3.50, while the historical performance-weighted rating is 3.24. The ratings are consistent, but they are neutral to buy in nature—clashing with the recent price decline of -1.91%.

On fundamentals, our proprietary model scores the company highly at 6.09. Key financials and their corresponding internal diagnostic scores (0-10) include:

• Net cash flow from operating activities per share (YoY growth rate %): -7.01% → Score: 3
• Price-to-earnings ratio (PE): 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: 24.13% → Score: 2
• Cash flow from operating activities (CFOA): 4.39% → Score: 3
• Total assets turnover ratio: 47.43% → Score: 2
• Cost of sales ratio: 51.14% → Score: 1
• Current ratio: 78.39% → Score: 2
• Cash-MV: 64.75% → Score: 2

The company shows strength in cash flow and liquidity but faces challenges in profit margins and sales efficiency.

Money-Flow Trends: Big Money Exits, Retailers Stay Neutral

Our proprietary fund-flow model shows a 7.75 internal diagnostic score (good). However, the overall trend is negative, with large and extra-large investors seeing outflows. Specifically:

• Small investors: 50.74% inflow ratio, with a positive trend.
• Medium investors: 50.13% inflow ratio, positive trend.
• Large and extra-large investors: 47.34% and 47.05% inflow ratios, both with negative trends.

Big institutional players are trending out, while small investors remain cautiously optimistic. This divergence suggests caution from professional money managers amid market uncertainty.

Key Technical Signals: Bearish Momentum and Weak Chart Patterns

The technical side of The Sherwin-Williams is weak, with 6 bearish vs. 0 bullish signals over the last five days. Here are the key internal diagnostic scores (0-10) for notable indicators:

• WR Overbought: 2.13 — A bearish divergence signal.
• Bearish Engulfing: 6.13 — A classic bearish candlestick pattern.
• MACD Death Cross: 2.21 — A bearish crossover of the moving average convergence divergence.

Recent chart patterns include:

• August 29: MACD Death Cross triggered.
• August 28: Bearish Engulfing pattern formed.
• August 19: WR Overbought and Bullish Engulfing pattern appeared — mixed signals but overall bearish bias.

Key technical insight: The market is in a volatile state, and the direction is not clear enough. Bearish signals are dominant, and investors are advised to avoid entering new positions.

Conclusion: Wait for Clarity or a Pull-Back

Despite strong fundamentals and a relatively high proprietary model score of 6.09, the technical outlook is weak. Bearish momentum is clear, with six negative indicators outpacing zero bullish ones. The fund-flow data also shows a divergence between retail and institutional sentiment. Given the internal diagnostic technical score of 3.2 (weak), we recommend waiting for a clearer trend or a potential pull-back before considering a position in SHW. For now, proceed with caution and monitor key earnings or macroeconomic events for renewed direction.