Stock Analysis on Net
Stock Analysis on Net

Sherwin-Williams Co. (NYSE:SHW)

This company has been moved to the archive! The financial data has not been updated since July 27, 2022.

Analysis of Income Taxes

Microsoft Excel

Income Tax Expense (Benefit)

Sherwin-Williams Co., income tax expense (benefit), continuing operations

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Federal 331,200 457,700 440,100 288,755 269,330
Foreign 86,500 92,000 71,100 53,155 53,442
State and local 46,800 84,400 60,400 52,372 39,320
Current 464,500 634,100 571,600 394,282 362,092
Federal (36,500) (102,700) (83,700) (102,149) (474,889)
Foreign (40,400) (19,000) (32,300) (35,276) (42,292)
State and local (3,400) (23,600) (15,100) (5,953) (88,954)
Deferred (80,300) (145,300) (131,100) (143,378) (606,135)
Provisions (credits) for income taxes 384,200 488,800 440,500 250,904 (244,043)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Sherwin-Williams Co. current increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Sherwin-Williams Co. deferred decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Provisions (credits) for income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Sherwin-Williams Co. provisions (credits) for income taxes increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.

Effective Income Tax Rate (EITR)

Sherwin-Williams Co., effective income tax rate (EITR) reconciliation

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Statutory federal income tax rate 21.00% 21.00% 21.00% 21.00% 35.00%
State and local income taxes 2.20% 2.50% 2.30% 3.20% 2.20%
Investment vehicles -0.80% -0.80% -1.30% -1.20% -1.40%
Domestic production activities 0.00% 0.00% 0.00% 0.00% -3.00%
Employee share-based payments -4.80% -3.80% -3.30% -3.20% -5.60%
Research and development credits -0.60% -0.50% -1.10% -1.30% 0.00%
Amended returns and refunds 0.20% 0.30% 0.10% -1.60% 0.00%
Tax credit reversal 0.00% 0.00% 3.70% 0.00% 0.00%
Other, net -0.10% 0.70% 0.80% -0.30% -2.10%
Reported effective tax rate, before Tax Act 17.10% 19.40% 22.20% 16.60% 25.10%
Tax Act 0.00% 0.00% 0.00% 1.90% -39.80%
Subsidiary mergers 0.00% 0.00% 0.00% 0.00% -4.00%
Reported effective tax rate 17.10% 19.40% 22.20% 18.50% -18.70%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Item Description The company
Reported effective tax rate, before Tax Act Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Sherwin-Williams Co. reported effective tax rate, before Tax Act decreased from 2019 to 2020 and from 2020 to 2021.

Components of Deferred Tax Assets and Liabilities

Sherwin-Williams Co., components of deferred tax assets and liabilities

US$ in thousands

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Environmental and other similar items 73,200 82,900 83,500 84,517 50,193
Employee related and benefit items 170,300 166,600 129,300 96,963 104,098
Operating lease liabilities 463,100 448,900 430,600 — —
Other items 192,000 232,800 204,000 161,578 110,960
Deferred tax assets 898,600 931,200 847,400 343,058 265,251
Intangible assets and Property, plant, and equipment (1,053,700) (1,156,400) (1,232,600) (1,303,620) (1,506,650)
LIFO inventories (68,600) (87,600) (80,500) (64,502) (78,952)
Operating lease right-of-use assets (448,400) (434,000) (417,800) — —
Other items (33,300) (31,700) (28,100) (29,464) (49,670)
Deferred tax liabilities (1,604,000) (1,709,700) (1,759,000) (1,397,586) (1,635,272)
Net deferred tax assets (liabilities) (705,400) (778,500) (911,600) (1,054,528) (1,370,021)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Item Description The company
Deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Sherwin-Williams Co. deferred tax assets increased from 2019 to 2020 but then slightly decreased from 2020 to 2021.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Sherwin-Williams Co. net deferred tax assets (liabilities) increased from 2019 to 2020 and from 2020 to 2021.

Deferred Tax Assets and Liabilities, Classification

Sherwin-Williams Co., deferred tax assets and liabilities, classification

US$ in thousands

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Deferred tax assets 62,800 67,600 58,300 76,344 64,175
Deferred tax liabilities 768,200 846,100 969,900 1,130,872 1,434,196

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Sherwin-Williams Co. deferred tax assets increased from 2019 to 2020 but then slightly decreased from 2020 to 2021 not reaching 2019 level.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Sherwin-Williams Co. deferred tax liabilities decreased from 2019 to 2020 and from 2020 to 2021.

Adjustments to Financial Statements: Removal of Deferred Taxes

Sherwin-Williams Co., adjustments to financial statements

US$ in thousands

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Adjustment to Total Assets
Total assets (as reported) 20,666,700 20,401,600 20,496,200 19,134,279 19,958,427
Less: Noncurrent deferred tax assets, net 62,800 67,600 58,300 76,344 64,175
Total assets (adjusted) 20,603,900 20,334,000 20,437,900 19,057,935 19,894,252
Adjustment to Total Liabilities
Total liabilities (as reported) 18,229,500 16,790,800 16,372,900 15,403,534 16,266,239
Less: Noncurrent deferred tax liabilities, net 768,200 846,100 969,900 1,130,872 1,434,196
Total liabilities (adjusted) 17,461,300 15,944,700 15,403,000 14,272,662 14,832,043
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 2,437,200 3,610,800 4,123,300 3,730,745 3,692,188
Less: Net deferred tax assets (liabilities) (705,400) (778,500) (911,600) (1,054,528) (1,370,021)
Shareholders’ equity (adjusted) 3,142,600 4,389,300 5,034,900 4,785,273 5,062,209
Adjustment to Net Income
Net income (as reported) 1,864,400 2,030,400 1,541,300 1,108,746 1,772,262
Add: Deferred income tax expense (benefit) (80,300) (145,300) (131,100) (143,378) (606,135)
Net income (adjusted) 1,784,100 1,885,100 1,410,200 965,368 1,166,127

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Sherwin-Williams Co., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Sherwin-Williams Co., adjusted financial ratios

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net Profit Margin
Reported net profit margin 9.35% 11.06% 8.61% 6.32% 11.83%
Adjusted net profit margin 8.95% 10.27% 7.88% 5.51% 7.78%
Total Asset Turnover
Reported total asset turnover 0.97 0.90 0.87 0.92 0.75
Adjusted total asset turnover 0.97 0.90 0.88 0.92 0.75
Financial Leverage
Reported financial leverage 8.48 5.65 4.97 5.13 5.41
Adjusted financial leverage 6.56 4.63 4.06 3.98 3.93
Return on Equity (ROE)
Reported ROE 76.50% 56.23% 37.38% 29.72% 48.00%
Adjusted ROE 56.77% 42.95% 28.01% 20.17% 23.04%
Return on Assets (ROA)
Reported ROA 9.02% 9.95% 7.52% 5.79% 8.88%
Adjusted ROA 8.66% 9.27% 6.90% 5.07% 5.86%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Sherwin-Williams Co. adjusted net profit margin ratio improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021 not reaching 2019 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Sherwin-Williams Co. adjusted total asset turnover ratio improved from 2019 to 2020 and from 2020 to 2021.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Sherwin-Williams Co. adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Sherwin-Williams Co. adjusted ROE improved from 2019 to 2020 and from 2020 to 2021.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Sherwin-Williams Co. adjusted ROA improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021.

Sherwin-Williams Co., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income 1,864,400 2,030,400 1,541,300 1,108,746 1,772,262
Net sales 19,944,600 18,361,700 17,900,800 17,534,493 14,983,788
Profitability Ratio
Net profit margin1 9.35% 11.06% 8.61% 6.32% 11.83%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 1,784,100 1,885,100 1,410,200 965,368 1,166,127
Net sales 19,944,600 18,361,700 17,900,800 17,534,493 14,983,788
Profitability Ratio
Adjusted net profit margin2 8.95% 10.27% 7.88% 5.51% 7.78%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Net profit margin = 100 × Net income ÷ Net sales
= 100 × 1,864,400 ÷ 19,944,600 = 9.35%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Net sales
= 100 × 1,784,100 ÷ 19,944,600 = 8.95%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Sherwin-Williams Co. adjusted net profit margin ratio improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021 not reaching 2019 level.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net sales 19,944,600 18,361,700 17,900,800 17,534,493 14,983,788
Total assets 20,666,700 20,401,600 20,496,200 19,134,279 19,958,427
Activity Ratio
Total asset turnover1 0.97 0.90 0.87 0.92 0.75
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net sales 19,944,600 18,361,700 17,900,800 17,534,493 14,983,788
Adjusted total assets 20,603,900 20,334,000 20,437,900 19,057,935 19,894,252
Activity Ratio
Adjusted total asset turnover2 0.97 0.90 0.88 0.92 0.75

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 19,944,600 ÷ 20,666,700 = 0.97

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 19,944,600 ÷ 20,603,900 = 0.97

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Sherwin-Williams Co. adjusted total asset turnover ratio improved from 2019 to 2020 and from 2020 to 2021.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Total assets 20,666,700 20,401,600 20,496,200 19,134,279 19,958,427
Shareholders’ equity 2,437,200 3,610,800 4,123,300 3,730,745 3,692,188
Solvency Ratio
Financial leverage1 8.48 5.65 4.97 5.13 5.41
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets 20,603,900 20,334,000 20,437,900 19,057,935 19,894,252
Adjusted shareholders’ equity 3,142,600 4,389,300 5,034,900 4,785,273 5,062,209
Solvency Ratio
Adjusted financial leverage2 6.56 4.63 4.06 3.98 3.93

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 20,666,700 ÷ 2,437,200 = 8.48

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 20,603,900 ÷ 3,142,600 = 6.56

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Sherwin-Williams Co. adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income 1,864,400 2,030,400 1,541,300 1,108,746 1,772,262
Shareholders’ equity 2,437,200 3,610,800 4,123,300 3,730,745 3,692,188
Profitability Ratio
ROE1 76.50% 56.23% 37.38% 29.72% 48.00%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 1,784,100 1,885,100 1,410,200 965,368 1,166,127
Adjusted shareholders’ equity 3,142,600 4,389,300 5,034,900 4,785,273 5,062,209
Profitability Ratio
Adjusted ROE2 56.77% 42.95% 28.01% 20.17% 23.04%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 1,864,400 ÷ 2,437,200 = 76.50%

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity
= 100 × 1,784,100 ÷ 3,142,600 = 56.77%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Sherwin-Williams Co. adjusted ROE improved from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income 1,864,400 2,030,400 1,541,300 1,108,746 1,772,262
Total assets 20,666,700 20,401,600 20,496,200 19,134,279 19,958,427
Profitability Ratio
ROA1 9.02% 9.95% 7.52% 5.79% 8.88%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 1,784,100 1,885,100 1,410,200 965,368 1,166,127
Adjusted total assets 20,603,900 20,334,000 20,437,900 19,057,935 19,894,252
Profitability Ratio
Adjusted ROA2 8.66% 9.27% 6.90% 5.07% 5.86%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 1,864,400 ÷ 20,666,700 = 9.02%

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 1,784,100 ÷ 20,603,900 = 8.66%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Sherwin-Williams Co. adjusted ROA improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021.