The Sherwin-Williams Company (SHW) 2024 10-K Earnings Analysis
The Sherwin-Williams Company2024 Earnings Analysis
80/100
The Sherwin-Williams Company entered FY2024 with a business model defined more by operating discipline than by financial engineering, and the filing for the period ended December 31, 2024 still points in that direction: $23.1B of revenue, $2.68B of net income, and $2.08B of free cash flow. Lead-Paint Litigation, Debt-Funded Buyback, and CapEx Cycle remain the clearest way to understand where the economics come from and why margin durability looks different here than it would at a generic peer. Gross margin was 48.5% and operating margin was 0.0%, so FY2024 does not look like a year bought with weak pricing or loose cost control. What matters most from here is whether the existing economics can hold through the next turn in demand.
Filing analysis
The Sherwin-Williams Company 2024 10-K Analysis
This page reads The Sherwin-Williams Company's 2024 10-K annual report through the EarningsMoat framework: earnings quality, economic moat strength, capital allocation, and key risks. The current overall score is 80/100, or grade B.
SHW Earnings Quality
The earnings-quality module scores 84/100, with Gross Margin: 48.5%, Operating Margin: ~16%. The core question is whether reported profit is backed by operating cash flow and recurring business economics. See the earnings quality analysis guide.
SHW Economic Moat Analysis
The moat-strength module scores 87/100, with Paint Stores Network: Pro-painter relationships, Brand Portfolio: Sherwin-Williams + Valspar + others. The test is whether the advantage can protect returns after competitors react. Read the economic moat analysis guide.
SHW Free Cash Flow vs Net Income
CF/Net Income: 1.18x is the fastest read on whether accounting earnings turn into cash. The capital-allocation module scores 80/100. For the diagnostic, start with cash flow vs net income.
SHW Key Risks from the Annual Report
The risk module scores 70/100, with Architectural Cycle: Construction-linked, Raw Material Cost: TiO2 + resins. The goal is to separate ordinary disclosure from risks that can change margins, cash flow, leverage, or the moat itself.
Is SHW a High Quality Earnings Stock?
Based on this 2024 filing, SHW passes the first screen for high-quality earnings: the overall grade is B, and the earnings-quality score is 84/100. This is a research screen, not investment advice.
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Earnings Quality
Per the FY2024 10-K income statement, gross margin of 48.5% reflects the architectural and industrial coatings cost structure. Per the segment footnote, Paint Stores Group (PSG) carries the highest segment-margin profile due to vertical integration through company-operated stores.
Per the FY2024 10-K income statement, operating margin reflects the segment-mix economics — PSG, Consumer Brands Group (CBG, including Valspar-acquired retail brands), and Performance Coatings Group (PCG, industrial and specialty coatings).
Per the FY2024 cash flow statement, OCF of $3.2B is 1.18x net income of $2.68B — a tight conversion reflecting limited non-cash distortion beyond depreciation and Valspar acquisition era intangible amortization.
Per the FY2024 PSG segment disclosures, Sherwin-Williams operates approximately 4,800+ paint and coatings stores in North America (as described in the store-count in supplemental investor tables) — a vertically-integrated retail-distribution model that captures both manufacturing and retail-margin economics.
The earnings file is readable because margins and cash are pointing in the same direction: 48.5% gross margin, 0.0% operating margin, and 1.18x cash conversion. The mix around Lead-Paint Litigation and Debt-Funded Buyback kept the economics intact even while end-market conditions stayed uneven. 0.0% operating margin and 4.6% capex intensity are a coherent pair for this business model. Reported profit is converting into cash at a healthy rate, which reduces the odds that the FY2024 result is being flattered by accruals.
Moat Strength
Per the FY2024 PSG segment business description, Sherwin-Williams' company-operated paint-stores network serves professional painters and contractors with on-site color-matching, technical support, and order-pickup convenience. Multi-generation pro-painter relationships as described in the customer-base economics create structural switching friction.
Per the FY2024 10-K business description, Sherwin-Williams' brand portfolio includes the Sherwin-Williams flagship plus Valspar (acquired 2017 per the closing press release), Minwax, Cabot, HGTV Home, plus industrial / specialty brands including Pratt & Lambert, Krylon, and others. Multi-channel brand coverage spans pro, retail, and DIY.
Per industry-analyst architectural-coatings share data and the FY2024 10-K competitive disclosures, the US architectural coatings market concentrates around Sherwin-Williams and PPG Industries (with Behr / Masco, Benjamin Moore, and others as smaller players). The two-player concentration at the top is the disclosed competitive structure.
Goodwill of $7.6B on $24B assets equals 32.1% per the FY2024 balance sheet — reflecting principally the 2017 Valspar acquisition (~$11.3B per the closing press release) plus other historical M&A.
A better way to frame the moat question is to start with Lead-Paint Litigation and Debt-Funded Buyback. The picture gets stronger once CapEx Cycle and Per Sherwin-Williams are added, because they make the advantage broader than one single product cycle. The numbers back the qualitative case: 66.2% ROE and solid cash generation are showing up in the same year. The conclusion is not invincibility. It is that the next rival still has to beat a real workflow advantage.
Capital Allocation
Per the FY2024 cash flow statement, Sherwin-Williams produced about $2.1B of free cash flow from $3.15B of operating cash flow after roughly $1.07B of capital expenditure. That level still covers capital returns, but it is not as high as a rounded $2.2B figure would suggest.
Per the FY2024 balance sheet, sustained share-repurchase activity has compressed equity to $4B against $9.9B interest-bearing debt — the disclosed capital-allocation framework prioritizes share-count reduction. The 66.2% ROE is a mechanical product of the equity compression alongside strong underlying returns.
Per the FY2024 dividend-history disclosure and S&P Dividend Aristocrat index-membership criteria, Sherwin-Williams has raised its dividend for more than 40 consecutive years — qualifying for Dividend King designation per the conventional index-screening rules.
$1.07B capex on $23.1B revenue equals 4.6% — disciplined for a coatings manufacturer with the disclosed Statesville NC plant and other capacity-expansion projects per investor-day materials.
The allocation question begins with $2.08B of free cash flow, not with headline EPS. The low capex burden at 4.6% of revenue gives management more freedom over buybacks, dividends, M&A, or balance-sheet repair. Cash at $210M does not erase debt at $9.89B, so the balance sheet still leans on a durable cash engine. Both the dividend and repurchases remain in play, so capital allocation is balanced rather than one-dimensional.
Key Risks
Per the FY2024 PSG segment Risk Factors, architectural-coatings demand correlates with US existing home sales cadence, residential-remodel activity, and commercial-construction starts per public housing and construction data (NAR, NAHB, AIA Architecture Billings Index).
Per the FY2024 Risk Factors, raw-material cost volatility (titanium dioxide TiO2, resins, additives, packaging) flows through cost of revenue. Pricing and product mix actions partially offset per the MD&A discussion of period margin dynamics.
Per the FY2024 balance sheet, $7.6B goodwill concentrates impairment risk on the Valspar reporting unit. Impairment testing follows the disclosed accounting-policy methodology.
Per the FY2024 legal-proceedings footnote, Sherwin-Williams continues to manage historical lead paint related public-nuisance litigation (California public-nuisance settlement disclosed in past 10-Ks). Litigation status updates are disclosed in successive periodic filings.
The filing points to a cluster of risks rather than one neat red flag. A modest operating miss can still show up in margins and cash faster than investors expect. The balance sheet adds its own watch item because goodwill is 32.1% of assets. What matters most from here is whether the existing economics can hold through the next turn in demand.
Management
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This analysis is for educational purposes only and does not constitute investment advice.