Stock Analysis on Net
Stock Analysis on Net

Sherwin-Williams Co. (NYSE:SHW)

Common-Size Income Statement 

Sherwin-Williams Co., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2025 Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Net sales 100.00 100.00 100.00 100.00 100.00
Cost of goods sold -51.15 -51.53 -53.33 -57.90 -57.17
Gross profit 48.85% 48.47% 46.67% 42.10% 42.83%
Selling, general and administrative expenses -32.64 -32.13 -30.65 -28.59 -29.49
Provisions for environmental matters, net -0.06 0.01 -0.35 0.03 0.02
Gain (loss) on divestiture of business 0.00 0.00 0.09 0.00 -0.56
Gain (loss) on sale or disposition of assets 0.14 0.22 0.00 0.08 0.03
Other -0.04 -0.05 -0.02 0.00 0.00
Other general income (expense), net 0.04% 0.17% -0.29% 0.11% -0.51%
Impairment -0.08 0.00 -0.25 -0.07 0.00
Operating income 16.17% 16.50% 15.48% 13.56% 12.83%
Interest expense -1.97 -1.80 -1.81 -1.76 -1.68
Interest income 0.05 0.05 0.11 0.04 0.02
Investment gains (losses) 0.04 0.07 0.10 -0.04 0.15
Gain (loss) on extinguishment of debt 0.00 0.00 -0.06 0.00 0.01
Net expense from banking activities -0.07 -0.07 -0.07 -0.06 -0.05
Foreign currency transaction related losses, net -0.19 -0.02 -0.35 -0.15 -0.06
Miscellaneous pension and benefit income (expense) 0.06 0.06 0.09 -0.02 -0.02
Other income 0.13 0.30 0.21 0.18 0.15
Other expense -0.05 -0.15 -0.22 -0.12 -0.07
Other income (expense), net -0.09% 0.19% -0.28% -0.21% 0.10%
Income before income taxes 14.16% 14.94% 13.49% 11.62% 11.27%
Income taxes -3.26 -3.34 -3.13 -2.50 -1.93
Net income 10.90% 11.61% 10.36% 9.12% 9.35%

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

The common-size income statement reveals several noteworthy trends over the five-year period. A consistent improvement in gross profitability is observed, alongside evolving expense management and fluctuations in non-operating items impacting net income.

Profitability
Gross profit as a percentage of net sales demonstrates a positive trend, increasing from 42.83% in 2021 to 48.85% in 2025. This suggests improving efficiency in production or sourcing, or potentially increased pricing power. Operating income also shows a steady increase, rising from 12.83% to 16.17% over the same period, indicating effective control of operating expenses relative to sales. Net income margin follows a similar pattern, growing from 9.35% in 2021 to 10.90% in 2025, though with some volatility.
Cost of Goods Sold & Expenses
Cost of goods sold decreased as a percentage of net sales, moving from -57.17% in 2021 to -51.15% in 2025, contributing to the improved gross profit margin. Selling, general and administrative expenses increased steadily as a percentage of net sales, from -29.49% to -32.64%, potentially reflecting increased investment in sales and marketing or administrative overhead. Provisions for environmental matters show variability, moving from a small positive percentage in 2021 and 2022 to a negative percentage in 2023 and 2025, suggesting fluctuating environmental-related costs or benefits.
Non-Operating Items
Several non-operating items exhibit fluctuations. Gains (losses) on divestiture and sale of assets are present in certain years but not others, introducing volatility. Other income demonstrates an overall increase from 0.15% to 0.13% over the period, with a peak in 2024 at 0.30%. However, other expense also fluctuates, partially offsetting these gains. Interest expense remains relatively stable as a percentage of net sales, while interest income shows modest growth. Foreign currency transaction losses are notable, particularly in 2022 and 2025, indicating potential exposure to currency fluctuations.
Tax Rate
The effective tax rate, expressed as a percentage of net sales, increased from -1.93% in 2021 to -3.26% in 2025. This suggests a higher proportion of income is being allocated to income taxes, potentially due to changes in tax laws or the geographic distribution of profits.
Impairment & Other Adjustments
Impairment charges appear in 2022, 2023, and 2025, representing a negative percentage of net sales in those years. These charges suggest a write-down of asset values, potentially due to changing market conditions or company-specific factors. The presence of these charges impacts overall profitability in the respective years.

Overall, the financial performance demonstrates a positive trend in core profitability, driven by improved gross margins and operating efficiency. However, the impact of non-operating items and fluctuating tax rates introduces some volatility. Continued monitoring of expense management and the impact of non-operating items will be crucial for sustained profitability.