A paint firm that outperformed the market
Most people think of blockbuster technology stocks when they consider good investments, names such as Apple or Microsoft. However, not all top performers are from Silicon Valley. A good example is Sherwin-Williams (SHW), the global leader in paint and coatings.
Founded in the immediate aftermath of the Civil War, Sherwin-Williams grew slowly in the early years but truly took off in the 1980s. That was when it began opening retail outlets and becoming a household name among professionals and homeowners alike. Over the decades, it became a household brand and a sound company.
The big growth years
While Sherwin-Williams has been in business for more than 150 years, its true success came over the last 20 years. Through smart purchases and expansion, it built an incredible presence in the paint world.
One of its biggest deals was the purchase of Valspar in 2017 for $11 billion. The company became even bigger and more profitable as a result of the deal. Sherwin-Williams currently has over 5,400 stores in over 120 countries, a real powerhouse on the global scene.
Before the Valspar buyout, Sherwin-Williams’ operating margins, or its measure of profit, were around 14%. Now, they are as close as 19%, a reflection of how much more streamlined and more efficient the company has become. Over the last five years, its top line went up by 26%, but its bottom line went up even higher — 31%.
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Reliable dividends and steady returns
Sherwin-Williams is not all about expansion. It’s also famous for paying back to investors. The company has raised its dividend payment each year for almost 50 years, making it among the most consistent dividend stocks in America.
While the painting industry depends on the housing and construction industries — which fluctuate along with the economy — Sherwin-Williams adapts in ways to stay healthy. It regularly uses stock buybacks and steady dividend payouts to keep shareholders happy, even during slow-selling periods.
In 2024, the company’s good name was officially vindicated when Sherwin-Williams was added to the Dow Jones Industrial Average, a list of America’s 30 most important companies.
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How much would $1,000 be worth today?
Now, on to the good stuff — the numbers.
If you had put $1,000 into Sherwin-Williams stock 20 years ago, that $1,000 would now be worth more than $31,000. That’s a fantastic return for a company that sells paint and coatings.
To put it into context, the same $1,000 invested in the S&P 500 index — the average performance of large U.S. companies—would be worth around $7,900 today.
This implies Sherwin-Williams didn’t merely keep pace with the market; it surpassed it by quite a bit. In its existence as a publicly held company, SHW has averaged a 17% annual return, which is roughly 6% better than the S&P 500.
What analysts say now
Despite 20 years of expansion, Wall Street analysts continue to look for promise in Sherwin-Williams. Based on S&P Global Market Intelligence, of 27 analysts
12 rate it a “Strong Buy”,
3 rate it as “Buy”,
11 label it a “Hold”, and
only one rates it a “Strong Sell”.
That leaves the stock with an aggregate “Buy” rating, though there’s not uniformity. Argus Research analyst Alexandra Yates declares Sherwin-Williams still a “core long-term holding”. She declares that the company could benefit from decreased interest rates and a housing revival.
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