Sherwin Williams (SHW) Margin Compression Challenges Premium 34x P E Narrative

Simply Wall St.01-30

Sherwin-Williams (SHW) has wrapped up FY 2025 with fourth quarter revenue of US$5,595.9 million and basic EPS of US$1.94, alongside trailing twelve month revenue of US$23.6 billion and EPS of US$10.37...

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Over recent periods, revenue has moved from US$5,297.2 million in Q4 2024 to US$5,595.9 million in Q4 2025, while quarterly EPS has been reported at US$1.92 and US$1.94 respectively, giving investors a clear read on how top line and per share profits are tracking into the current share price of US$354.58. With trailing net margins softening slightly and growth expectations still in focus, this set of results puts profitability and how it is trending at the center of the story for shareholders. See our full analysis for Sherwin-Williams. With the latest numbers on the table, the next step is to see how this earnings profile lines up against the prevailing narratives around Sherwin-Williams, and where the data may either support or challenge those views. Curious how numbers become stories that shape markets? Explore Community Narratives NYSE:SHW Revenue & Expenses Breakdown as at Jan 2026 AdvertisementMargins Ease Back To 10.9%  Over the last 12 months, Sherwin-Williams converted US$23.6b of revenue into US$2.6b of net income, which works out to a 10.9% net margin versus 11.6% a year earlier. Bullish investors often focus on the roughly 7.2% annual earnings growth over five years and the forecast 9.2% yearly earnings growth. However, the slip in net margin from 11.6% to 10.9% means:\n     The long run earnings track record lines up with the idea of ongoing profit growth, while the margin step down reminds you that recent profitability has been a bit tighter than before. This mix of growth and softer margins gives you a concrete set of numbers to weigh if you are comparing Sherwin-Williams to other companies with steadier margin profiles.    Quarterly Profitability Stays Above US$476 Million  In Q4 2025, net income was US$476.8 million on US$5.6b of revenue, compared with US$480.1 million on US$5.3b of revenue in Q4 2024, showing that profit held close to the prior year even as sales were higher. Bullish commentary often leans on Sherwin-Williams as a quality coatings business with broad demand across housing and industrial end markets. The Q4 numbers interact with that idea in a couple of useful ways:\n     Quarterly revenue stepped up from US$5.3b to US$5.6b year on year, which sits comfortably with the view that paint and coatings demand is supported by ongoing maintenance and construction activity. At the same time, net income in Q4 2025 was slightly below the prior year despite the higher revenue, which shows that even a well established brand can see profit pressure when costs or mix move against it.    Premium 34x P/E And DCF Gap  The shares trade at US$354.58 with a 34x P/E, above the peer and US Chemicals averages of about 25.9x and 25.8x, while the referenced DCF fair value is US$77.19, which is far below the current price. Bears point to the rich 34x P/E and the large gap to the US$77.19 DCF fair value, and the latest earnings context adds more detail to that concern:\n     Forecast revenue growth of 4.3% a year and forecast earnings growth of 9.2% a year are positive on their own, yet they are being weighed against a multiple that is materially higher than peers and the industry. The company is also flagged as carrying a high level of debt, so anyone worried about paying a premium for the stock has real numbers on both valuation and leverage to factor into their risk assessment.    Curious how numbers become stories that shape markets? Explore Community Narratives  Next Steps Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Sherwin-Williams's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move. See What Else Is Out There Sherwin-Williams combines slightly softer net margins, a premium 34x P/E versus peers, and a high debt load, which leaves some investors questioning the risk reward trade off. If that mix of tighter profitability, richer pricing, and leverage feels uncomfortable, use our CTA_SCREENER_SOLID_BALANCE_SHEET to quickly focus on companies built on sturdier balance sheets and financial strength.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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