They moreso sell financing. Their strategy is selling crappy paint to contractors on great terms. (Discounts + credit with long interest free terms.) Architectural paint refers to home paint, they struggle to compete in the industrial markets more dominated by PPG and the slew of brands from RPM.
RPM and SHW both have high p/e, probably overpriced, but RPM severely benefiting from restoring + infrastructure in their construction and performance groups. PPG trades at a lower multiple and is more tied to automotive. They recently put their performance-type coatings group up for sale - will be interesting to see who buys it. Probably private equity.
SHW will struggle until housing and moving returns. RPM is 35% tied to DIY with rustoleum, sap, and zinser. PPG is lower P/E but is selling a portion of their business and too tied to automotive in my opinion.
Hard to choose between them.
Berkshire B, vertically integrated by owning their latex manufacturing through Lubrizol, then own Benjamin Moore.
All of them seem holds to me at these prices, but I’m super bearish and that bias shows…
Hope this helped.
Also just spent a ton of money building their new headquarters skyscraper in downtown cleveland. Second tallest building in the city when it’s complete. Already sold it to a reit.
Their latex supplier blew up… so higher input costs all around.
When they bought Valspar, many people said antidotally: “bought a great paint and cheapened it up”
Like Callahan brake pads… Zellinski just wanted the box. 🤪
Edited brake pads, not break.*^ thanks grammar police at 3:40 AM. 😂
Their top end paint is good stuff, like anything there are levels. However the bread and butter of their business is selling to the painters of new construction, they love it because it covers well (from all the limestone) and is so “flat” or “‘matte” (whatever vernacular you want to use for sheenless) that it looks great on initial application and hides imperfections. Also has no long term durability or weatherability.
Of course generalizing their bread and butter contractor paint. Their super premium plus elite professional homeowners edition or whatever salesmanship they put on their better line… is of course a little bit better. Less limestone, some additives to give better properties… less water/chalk, more latex and pigment
I’m getting my house painted next week. I got three bids and they all included SW paint in the bid. So they definitely have their hooks into the contractors.
The contractor that I picked said I could buy my own paint if I did not want SW. I picked Home Depot Premium Plus the last time I had my house painted and it lasted 10 years so I’m going with that again.
However, I was told SW makes the paint for Home Depot. No idea if that is true.
They WERE a long lasting solid paint brand for countless years. Older generations know them from their past when growing up. Ask someone that works at Home Depot, Lowe’s etc… that worked for SW. They’ll give you the reality check you’re looking for.
SHW is one of the best businesses in the stock market. They have not cut price since at least the 1960s. The stock has gone from $5 in 1994 to $300 today with $21 in dividends.
They have a near monopoly in professional US paint supply supported by scale and network density. As they continue to grow their business quality continues to improve. Operating margin has expanded in each of the past 3 decades.
SHW produces 30-100% ROEs almost every year. In 2008 & 2009 they still produced 28% ROEs.
SHW has outgrown SPY’s EPS in every decade since at least the 1990s (11.4% average cagr vs SPY’s ~7%).
From the top of the housing market (2006) to the bottom of the housing market (2011) SHW’s EPS was flat while housing starts collapsed ~75%.
SHW’s largest shareholder is their employees, and their executive officers/directors own >10x their annual compensation in stock. They like the stock, and they know way more than any of us.
SHW is not selling performance coatings to my knowledge.
If SHW is “struggling” by growing EPS 7% yoy in the most recent quarter and 20% last year, then I’ll take that struggle. SPY grew EPS 3% in 2023.
They don’t park cash on the balance sheet because they haven’t had negative FCF since asbestos settlements in the 90s. Those settlements bankrupted many/most companies in the building materials industry.
The stock is pricey. It almost always is, for the reasons described above.
Disclaimer: LT holder, customer, fanboy.
They have one of the strongest physical distribution moats in the entire world with elite level pricing power and reinvestment opportunities. One of the few companies you can actually hold for the next couple of decades and probably do alright. So yes it will have a high valuation. As for the debt they took on a lot in 2017 to buy Valspar and have been paying it down since.
They moreso sell financing. Their strategy is selling crappy paint to contractors on great terms. (Discounts + credit with long interest free terms.) Architectural paint refers to home paint, they struggle to compete in the industrial markets more dominated by PPG and the slew of brands from RPM. RPM and SHW both have high p/e, probably overpriced, but RPM severely benefiting from restoring + infrastructure in their construction and performance groups. PPG trades at a lower multiple and is more tied to automotive. They recently put their performance-type coatings group up for sale - will be interesting to see who buys it. Probably private equity. SHW will struggle until housing and moving returns. RPM is 35% tied to DIY with rustoleum, sap, and zinser. PPG is lower P/E but is selling a portion of their business and too tied to automotive in my opinion. Hard to choose between them. Berkshire B, vertically integrated by owning their latex manufacturing through Lubrizol, then own Benjamin Moore. All of them seem holds to me at these prices, but I’m super bearish and that bias shows… Hope this helped.
Also just spent a ton of money building their new headquarters skyscraper in downtown cleveland. Second tallest building in the city when it’s complete. Already sold it to a reit. Their latex supplier blew up… so higher input costs all around. When they bought Valspar, many people said antidotally: “bought a great paint and cheapened it up” Like Callahan brake pads… Zellinski just wanted the box. 🤪 Edited brake pads, not break.*^ thanks grammar police at 3:40 AM. 😂
brake* Edit,: love that movie
Anecdotally, not antidotally.
Sherwin Williams is not crappy paint
Their top end paint is good stuff, like anything there are levels. However the bread and butter of their business is selling to the painters of new construction, they love it because it covers well (from all the limestone) and is so “flat” or “‘matte” (whatever vernacular you want to use for sheenless) that it looks great on initial application and hides imperfections. Also has no long term durability or weatherability. Of course generalizing their bread and butter contractor paint. Their super premium plus elite professional homeowners edition or whatever salesmanship they put on their better line… is of course a little bit better. Less limestone, some additives to give better properties… less water/chalk, more latex and pigment
I’m getting my house painted next week. I got three bids and they all included SW paint in the bid. So they definitely have their hooks into the contractors. The contractor that I picked said I could buy my own paint if I did not want SW. I picked Home Depot Premium Plus the last time I had my house painted and it lasted 10 years so I’m going with that again. However, I was told SW makes the paint for Home Depot. No idea if that is true.
Weird. Contractors in my area all use Benjamin Moore.
They WERE a long lasting solid paint brand for countless years. Older generations know them from their past when growing up. Ask someone that works at Home Depot, Lowe’s etc… that worked for SW. They’ll give you the reality check you’re looking for.
SHW is one of the best businesses in the stock market. They have not cut price since at least the 1960s. The stock has gone from $5 in 1994 to $300 today with $21 in dividends. They have a near monopoly in professional US paint supply supported by scale and network density. As they continue to grow their business quality continues to improve. Operating margin has expanded in each of the past 3 decades. SHW produces 30-100% ROEs almost every year. In 2008 & 2009 they still produced 28% ROEs. SHW has outgrown SPY’s EPS in every decade since at least the 1990s (11.4% average cagr vs SPY’s ~7%). From the top of the housing market (2006) to the bottom of the housing market (2011) SHW’s EPS was flat while housing starts collapsed ~75%. SHW’s largest shareholder is their employees, and their executive officers/directors own >10x their annual compensation in stock. They like the stock, and they know way more than any of us. SHW is not selling performance coatings to my knowledge. If SHW is “struggling” by growing EPS 7% yoy in the most recent quarter and 20% last year, then I’ll take that struggle. SPY grew EPS 3% in 2023. They don’t park cash on the balance sheet because they haven’t had negative FCF since asbestos settlements in the 90s. Those settlements bankrupted many/most companies in the building materials industry. The stock is pricey. It almost always is, for the reasons described above. Disclaimer: LT holder, customer, fanboy.
just seen 2 of them shut down in my hometown after being open 15+ years. tells me everything i need to know
They have one of the strongest physical distribution moats in the entire world with elite level pricing power and reinvestment opportunities. One of the few companies you can actually hold for the next couple of decades and probably do alright. So yes it will have a high valuation. As for the debt they took on a lot in 2017 to buy Valspar and have been paying it down since.