The paint company has a storied history, but is now facing a “very challenging environment.”
It grew its earnings and revenue 3.3% and 3.2% year-over-year in the latest quarter, respectively.
The company’s most recent dividend increase, its 47th in as many years, points to solid prospects.
10 stocks we like better than Sherwin-Williams ›
In the second quarter of its 1965 fiscal year, just after its initial public offering the previous year, the paint maker Sherwin-Williams(NYSE: SHW) reported net income of $1.06 million. Sixty years later, in the second quarter of 2025, it reported net income of $754.7 million. Even taking into account the inflation seen at the time, this is an increase of approximately 7,200% in net income.
However, Sherwin-Williams stock has risen much faster, posting gains of 115,000% since 1985, the first year data on its stock price is available. What explains the stratospheric gains in a paint maker’s stock over the past 40 years?
Part of this is due to its sterling dividend history, having increased its dividends for 47 years and counting. But the main reason is share buybacks. The company has aggressively repurchased shares over the years, an inherently shareholder-friendly practice that increases earnings per share and, ultimately, the stock price. In the last decade alone, Sherwin-Williams has repurchased more than 53 million shares, representing more than 20% of the shares remaining outstanding.
Still, Sherwin-Williams shares have fallen about 4% so far this year amid the S&P 500Up 15%, and in last October’s earnings call, CEO Heidi Petz acknowledged that “a very challenging environment will persist through the first half of the year and most likely beyond that.” This admission followed news in September that the company was temporarily pausing its 401(k) match for employees.
Given all this, should investors avoid Sherwin-Williams despite its illustrious history? This is what the numbers tell us.
Sherwin-Williams is in a cyclical business. People may put off buying that coat of paint when they feel pressured, and a slower housing market with slumping construction further reduces demand. America’s sour economic mood, combined with low home sales across the country, has led to the “very challenging environment” Petz alluded to.
The good news is that interest rates are falling, as is the average 30-year fixed-rate mortgage. On its earnings call, Petz was asked how much further it needs to fall to catalyze demand in Sherwin-Williams’ paint store segment. Petz responded that “6% seems to be the magic number,” adding that “we all hope the Fed makes some changes in the future.”
As you can see, the average 30-year fixed mortgage is tantalizingly close to the “magic number.” With the Federal Reserve announcing a third rate cut earlier this month, it would likely take another 25 basis point cut to bring it below the 6% threshold Petz set.
Data source: Freddie Mac via FRED®
The next meeting of the Federal Open Monetary Committee, at which the Federal Reserve will announce its next interest rate decision, is scheduled for January 27 and 28. Therefore, Sherwin-Williams will have to wait five more weeks for more interest rate relief if the Federal Reserve actually cuts its rates.
But it seems clear that this will be the case. The November jobs report showing just 64,000 jobs added during the month should solidify Federal Reserve Chair Jerome Powell’s fear that the labor market needs some energy. This is doubly true as Powell has openly theorized that, as bad as the recent jobs numbers have been, they may actually be overstating added jobs by as much as 60,000 per month.
Of course, it will be some time before the lower rates are felt on Sherwin-Williams’ balance sheet. Meanwhile, these mid-to-high interest rates and flat housing market put last quarter’s earnings and revenue growth of 3.3% and 3.2% into context.
Image source: Getty Images.
As for the pause in the 401(k) match, at first it sounds like an ominous sign. But there is precedent for this move: Sherwin-Williams suspended its 401(k) plan during the 2009 financial crisis and again during the COVID-19 pandemic. The company’s stock has risen more than 1,700% since mid-2009, to give you an idea of what the 401(k) policy says about the stock.
Sherwin-Williams is on the cusp of a milestone that only one in every 1,000 companies has achieved: Dividend King status. Of around 53,000 publicly traded companies in the world, only 55 have increased their dividends every year for 50 years. Sherwin-Williams just capped its 47th dividend increase, and the increase wasn’t symbolic either. Its 10.5% increase in dividends was just the latest in a series of strong increases. In the last five years, it has increased its dividend by 44%.
The current 1% dividend yield may not be life-changing. But management will certainly covet Dividend King status, and I think they won’t be content to cross the finish line with nominal increases that lag inflation. This company’s track record of dividend growth is strong enough that a 1% yield can rise quickly.
Sherwin-Williams’ bad streak could last six months or more, its CEO has stated. But I think it is an action that will continue for decades.
Before you buy Sherwin-Williams stock, consider this:
He Varied and Dumb Stock Advisor The analyst team has just identified what they believe are the 10 best stocks for investors to buy now… and Sherwin-Williams was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you would have $509,039!* Or when NVIDIA made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $1,109,506!*
Now, it is worth noting stock advisor The total average performance is 972.%: An overwhelming outperformance of the market compared to the S&P 500’s 193%. Don’t miss the latest Top 10 list, available with Stock Advisorand join an investing community created by individual investors for individual investors.
See the 10 actions »
*Stock Advisor returns from December 15, 2025
William Dahl has no position in any of the stocks mentioned. The Motley Fool recommends Sherwin-Williams. The Motley Fool has a disclosure policy.
Is Sherwin-Williams still a buy after its 115,000% run? was originally published by The Motley Fool
