Stock Analysis | The Sherwin-Williams Outlook - A Weak Technical Profile Amid Mixed Analysts and Strong Fundamentals

The Sherwin-Williams Outlook - A Weak Technical Profile Amid Mixed Analysts and Strong Fundamentals

Market Snapshot: Current price trends show a 2.49% rise, but technical indicators suggest the stock is in a weak state with more bearish signals than bullish ones. The overall technical outlook is negative, as bearish indicators outnumber bullish ones by a wide margin.

News Highlights

• Safex Chemicals Expands Manufacturing Footprint (May 29, 2025): Safex Chemicals announced a new state-of-the-art facility in India. While this news is relevant to the chemical sector, it has minimal direct impact on Sherwin-Williams, which operates primarily in coatings and industrial products. The expansion could indirectly benefit the sector by boosting supply chain resilience.
• U.S. Curbs on Shipments to China (May 29, 2025): New restrictions on chip design software and chemicals could affect global supply chains. For Sherwin-Williams, which has international exposure, these developments could pose some risks, especially if raw material or component sourcing from China is affected.
• ETF Industry Growth in Asia Pacific (May 31, 2025): ETFGI reported record assets in Asia Pacific (excluding Japan) at $1.25 trillion. This suggests broader investor interest in diversified and cost-effective investment vehicles. While it doesn’t directly affect Sherwin-Williams, it reflects a growing appetite for stock exposure among global investors.

Analyst Views & Fundamentals

Analysts have shown a modestly neutral stance, with a simple average rating of 3.00 and a historical performance-weighted rating of 1.65. This signals some dispersion in views, with the one active analyst (Steve Byrne from B of A Securities) issuing a "Neutral" rating over the past 20 days. However, the stock is currently up 2.49%, which means analyst expectations appear to be somewhat misaligned with the recent price movement.

Key fundamental values and model scores:

• Net cash flow from operating activities per share (YoY growth rate %): -7.01% – Internal diagnostic score: 6.00
• PE ratio: 42.27 – Internal diagnostic score: 1.58
• Net cash flow from operating activities (YoY growth rate %): -8.09% – Internal diagnostic score: 6.00
• Cost of sales ratio: 51.14% – Internal diagnostic score: 1.24
• Fixed assets turnover ratio: 3.17 – Internal diagnostic score: 3.43
• CFOA (Cash flow from operating activities): 4.39% – Internal diagnostic score: 4.86
• Total profit / EBIT (%): 88.62% – Internal diagnostic score: 1.74
• Cash-UP ratio: 0.24 – Internal diagnostic score: 1.09
• Current ratio: 0.78 – Internal diagnostic score: 1.65
• Cash-MV ratio: 0.65 – Internal diagnostic score: 2.41

While the fundamentals show some strong cash flow indicators, the low scores on the PE and cost of sales ratios suggest investors should be cautious. The overall fundamental model score is 6.27, which indicates decent but not exceptional value.

Money-Flow Trends

Big-money flows are negative, with large and extra-large institutional investors showing outflows. However, retail investors (small and medium) are showing a positive trend. Specifically, the inflow ratios are as follows:

• Small investor inflow ratio: 51.51%
• Medium investor inflow ratio: 50.90%
• Large investor inflow ratio: 48.78%
• Extra-large investor inflow ratio: 47.56%

This suggests that while big institutions are taking a cautious or negative stance, retail investors still see some potential in the stock. The fund-flow score is 7.77, indicating a generally "good" flow from a retail perspective.

Key Technical Signals

The technical profile for Sherwin-Williams is currently weak, with a technical score of 2.52, and 6 bearish indicators versus 0 bullish ones over the last five days. Here are the internal diagnostic scores (0-10) for the most relevant indicators:

• WR Overbought: 2.17 – internal diagnostic score
• RSI Overbought: 1.00 – internal diagnostic score
• Bullish Engulfing: 1.78 – internal diagnostic score

Recent chart patterns: Over the last five trading days, key technical events include the following: WR Overbought and RSI Overbought signals on August 13, followed by WR Overbought on August 14. A mix of WR Overbought, Bullish Engulfing, and Marubozu White signals appeared on August 19, but none led to a sustained reversal in the bearish trend.

Based on the key insights from technical analysis:

• Technical indicators show the market is in a weak state.
• Bearish signals dominate (6 vs. 0 bullish), suggesting a high risk of further decline.

Conclusion

In summary, while Sherwin-Williams has strong fundamentals and a decent technical base in terms of retail inflow, the technical outlook remains weak and bearish indicators are currently dominant. Analyst ratings are mixed and not in line with recent price performance. Given the 2.52 technical score, our recommendation is to consider avoiding the stock for now and monitor it for a potential pullback. Investors with a longer-term view may want to wait for a clearer technical setup or a positive earnings surprise to consider a position.