Sherwin-Williams outlook

Sep 11, 2009 3 Replies
D

Dear All,



Shifting from macro to an industry level, looking at the business of Sherwin-Williams, it seems to me that the demand for paints is somewhat inelastic. People can defer painting for a year or two, but in the way of all paint, eventually it will crack and fade. Unpainted foreclosure properties will get new paint.



SHW is not the only industry with some pent-up demand? So from a financial planning point of view ... would anyone hazard a guess that the stock market has looked at all this, and so has rallied? (It now appears that the world is going to survive?)



formatting link
Best, Dapper.



Vote
Twitter Facebook LinkedIn
A

Scenario 1: Most of the users of SW paint are DIY - maint deferred for a year or two and then business picks up significantly.

Scenario 2: Most of the use is new home construction. No new homes for a larger number of years and then business picks up.

Scenario 3: Money is tight and users switch to generic brands made buy others. A person flipping a foreclosed property fits here.

Those who are buying think Scenario 1, those who are selling think Scenario 2 and 3. Which are right? come back in several years and look at the scoreboard.

Vote
Twitter Facebook LinkedIn
R

That's my case. I am buying SW paints for the interior painting. I contracted for outside painting from a professional painter who prefers Mautz paint (Mautz was acquired by SW).

-- Ron

Vote
Twitter Facebook LinkedIn
D

SHW defines three product groups. They made three or four acquisitions in 2008.

Sales (2008, in billions of $):

4.83 paint stores 1.27 consumer 1.87 global finishes

  1. 97 total

foreign subsidiaries 1.1 (this number found in the text of note 18 of the annual report).

I'm not nuts happy about their reporting, but their numbers are very good, considering. Global finishes was notably higher. The management discussion gives indications about the DYI v. commercial but the numbers do not jump off the page. The paint stores serve both DYI and commercial, while the consumer group manufactures and researches for the paint stores. Global finishes includes automotive and industrial coatings.

formatting link
One would assume by interpolating new housing starts v. number of years to repaint existing homes that most of their business is painting existing homes. I may call investor relations to ask them if they would supply data on this, and perhaps on number of years repainting can be deferred. Some brand switching may occur, but pent- up demand probably exists accross the industry.

Vote
Twitter Facebook LinkedIn

Join the Discussion

Have something to add? Share your thoughts — no account required.

Didn't find your answer?

Ask the community — no account required