Stock Analysis | The Sherwin-Williams Outlook - A Weak Technical Setup and Mixed Analyst Sentiment

The Sherwin-Williams Outlook - A Weak Technical Setup and Mixed Analyst Sentiment

Market Snapshot

Current price rise, but technical indicators suggest weakness — avoid for now.

The stock of The Sherwin-Williams (SHW) has seen a recent price increase of 1.95%, but the technical outlook is bearish. With six bearish and no bullish signals across seven indicators, the internal diagnostic score for technical analysis stands at 3.2 — a weak rating that suggests investors should avoid the stock for now.

News Highlights

Recent Developments That May Influence SHW:

• Safex Chemicals expands manufacturing in India — This move could indirectly impact SHW, which operates in the industrial and consumer markets. The facility adds 300 jobs and is scalable to 80 metric tons per day. A stronger industry could eventually support demand for Sherwin-Williams products.
• Changes in U.S. vaccine policy — While not directly related to SHW, evolving health policies could affect broader market sentiment and economic recovery, which in turn might influence SHW's consumer and industrial markets.
• ETFGI reports record ETF assets in Asia Pacific — This reflects growing global investor confidence and might indirectly bolster SHW if broader market optimism increases demand for industrial and home improvement products.

Analyst Views & Fundamentals

Analyst Sentiment: Mixed But Skewed Toward Caution

Over the past 20 days, two analysts from B of A Securities and Evercore ISI Group have issued ratings. The simple average rating is 3.50, while the performance-weighted rating is 3.24. The ratings are consistent (both recent calls were “Buy” and “Neutral”), but the price has risen, suggesting analysts are cautious despite the uptrend.

Key Fundamental Factors and Their Model Scores:

• ROA (Return on Assets) — 2.98% (internal diagnostic score: 6.34)
• PE (Price-to-Earnings ratio) — 42.27 (score: 2.69)
• CFOA (Cash Flow from Operating Activities) — 4.39% (score: 6.34)
• Cash-MV (Cash-to-Market Value) — 64.65% (score: 3.00)
• Net Cash Flow from Operating Activities per Share (YoY growth rate) — -7.01% (score: 6.34)
• Cost of Sales Ratio — 51.14% (score: 1.00)

While some fundamentals show strong cash flow and operating efficiency, the high PE ratio and weak cash flow growth point to a mixed outlook. Investors should watch how these factors evolve as the market reacts to broader economic and sector trends.

Money-Flow Trends

Big-Money Inflows Dampen Retail Optimism

Despite positive flows from smaller investors (Small_trend: positive), large institutional money is flowing out. The fund-flow score is 7.8 — a “good” rating — but the overall trend is negative. Specifically:

• Small investors — 50.92% inflow ratio (positive)
• Medium investors — 50.48% inflow (positive)
• Large investors — 47.46% inflow (negative trend)
• Extra-large investors — 47.04% inflow (negative trend)
• Overall inflow ratio — 47.68% (negative overall trend)

Investors should note the disconnect between retail and institutional behavior. While small investors appear optimistic, big money is pulling back — a cautionary sign for the near term.

Key Technical Signals

Weak Technical Setup with Mixed Indicators

SHW’s technical indicators show a weak setup, with only three neutral signals and six bearish ones. The internal technical score is 3.2 — suggesting the chart remains unattractive for new buyers.

Recent Indicators and Their Scores (Internal diagnostic scores 0–10):

• WR Overbought — 2.13 (suggests a weak overbought condition)
• MACD Death Cross — 2.21 (neutral bias, but a bearish signal)
• Bearish Engulfing — 6.13 (moderately bearish candlestick pattern)
• Ex-Dividend Date — 3.47 (neutral bias, but has historically underperformed)
• Marubozu White — 3.24 (neutral bias, but limited conviction in bullish momentum)

Recent Chart Patterns by Date:

• August 15 — Ex-Dividend Date, Dividend Record Date
• August 28 — Bearish Engulfing pattern formed
• August 19 — WR Overbought, Bullish Engulfing, and Marubozu White
• August 29 — MACD Death Cross

These mixed signals suggest the market is in a volatile and indecisive phase. The dominance of bearish indicators indicates that buyers are struggling to maintain control, and sellers may be gaining momentum.

Conclusion

Consider Waiting for a Pullback Before Re-Entering

With a weak technical setup, a mixed fundamental outlook, and institutional outflows, The Sherwin-Williams may not be the best short-term bet. The recent price rise has not been supported by strong momentum indicators, and the chart remains heavily bearish.

Investors should consider waiting for a pullback or clearer signs of bottoming on the technical side before committing to long positions. In the meantime, watching key factors like cash flow, earnings trends, and institutional positioning will be important for identifying when SHW might become a viable play again.