DCF Studio

    SHW · NYQ · Basic Materials

    The Sherwin-Williams Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 157.17

    Market price

    USD 352.37

    Implied upside

    -55.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 3.7% of revenue against depreciation of 2.7%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 21.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 157.17-55.4%
    Exit multiple
    USD 260.33-26.1%
    Market price
    USD 352.37

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 25.2bnUSD 26.3bnUSD 27.3bnUSD 28.3bnUSD 29.3bnUSD 30.3bnUSD 31.2bnUSD 32.2bnUSD 33.0bnUSD 33.9bn+3.3%
    EBITUSD 3.9bnUSD 4.0bnUSD 4.2bnUSD 4.4bnUSD 4.5bnUSD 4.7bnUSD 4.8bnUSD 5.0bnUSD 5.1bnUSD 5.2bn+3.3%
    NOPATUSD 3.1bnUSD 3.2bnUSD 3.3bnUSD 3.4bnUSD 3.6bnUSD 3.7bnUSD 3.8bnUSD 3.9bnUSD 4.0bnUSD 4.1bn+3.3%
    Add depreciation & amortisationUSD 686.5mUSD 715.2mUSD 743.5mUSD 771.4mUSD 798.8mUSD 825.5mUSD 851.3mUSD 876.1mUSD 899.9mUSD 922.4m+3.3%
    Less capital expenditureUSD -931.1mUSD -948.0mUSD -962.8mUSD -975.3mUSD -985.4mUSD -993.0mUSD -998.0mUSD -1.0bnUSD -999.7mUSD -996.4m+0.8%
    Capex, % of revenue3.7%3.6%3.5%3.4%3.4%3.3%3.2%3.1%3.0%2.9%-
    Less increase in working capitalUSD -182.6mUSD -118.1mUSD -116.9mUSD -115.1mUSD -112.8mUSD -109.9mUSD -106.4mUSD -102.4mUSD -97.8mUSD -92.7m-7.3%
    Free cashflow to firmUSD 2.6bnUSD 2.8bnUSD 3.0bnUSD 3.1bnUSD 3.3bnUSD 3.4bnUSD 3.5bnUSD 3.7bnUSD 3.8bnUSD 4.0bn+4.6%
    Discount factor0.95950.88340.81330.74880.68940.63470.58430.53790.49530.4560-
    Present valueUSD 2.5bnUSD 2.5bnUSD 2.4bnUSD 2.3bnUSD 2.3bnUSD 2.2bnUSD 2.1bnUSD 2.0bnUSD 1.9bnUSD 1.8bn-
    Present Value Of The ForecastUSD 22.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.036Reported 1.053, pulled toward 1.0 (Blume)
    Cost of equity9.27%Risk-free + beta x equity risk premium
    Cost of debt5.44%Risk-free + 55bp, the spread for a AA rating at 8.2x interest cover. Book interest / average debt was lower, at 3.7%.
    Market capitalisationUSD 85.1bn86.8% of capital
    Total debtUSD 12.9bn13.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.62%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 157.17

    58% of EV

    Forecast FCFF, final year
    USD 4.0bn
    Capex at depreciation, working capital in reinvestment
    USD 4.5bn
    Less reinvestment at g/ROIC (12.4% of NOPAT)
    USD -557.0m
    Capitalised
    USD 3.9bn
    ROIC (reported)
    20.2%
    Terminal value, undiscounted
    USD 66.1bn
    Terminal value, discounted
    USD 30.1bn
    Enterprise value
    USD 52.1bn
    Less net debt
    USD 12.7bn
    Equity value
    USD 39.4bn

    Exit at 20.0x EBITDA

    Value per shareUSD 260.33

    72% of EV

    Terminal value, undiscounted
    USD 122.7bn
    Terminal value, discounted
    USD 55.9bn
    Enterprise value
    USD 77.9bn
    Less net debt
    USD 12.7bn
    Equity value
    USD 65.2bn

    Spread between methods: 49%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.62%227.15240.88258.21280.63310.60
    7.62%180.71188.40197.79209.45224.18
    8.62%147.41151.85157.17163.62171.51
    9.62%122.39124.95128.00131.65136.05
    10.62%102.91104.33106.04108.08110.54

    Outlined: this model. Green text: above today's price of 352.37. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year2.1%3.7%12.0%
    EBIT margin16.3%15.4%30.4%
    Discount rate-8.6%5.7%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.