Sherwin-Williams Co. (NYSE:SHW)

The financial data reveals several notable trends in the company's performance and financial structure over the observed periods.

Return on Assets (ROA)

The ROA exhibits a generally positive trajectory starting from March 31, 2020, with missing values initially but showing values from March 31, 2021 onward. It increased from 9.95% in March 2021 to a peak of approximately 11.35% in March 2025, indicating an improving efficiency in utilizing assets to generate earnings. There are minor fluctuations observed, such as slight dips in mid-2022 and late 2023, but overall, the trend suggests strengthened asset profitability.

Financial Leverage

Financial leverage demonstrated higher variability during the time frame. Starting at a high level of 6.25 in March 2020, financial leverage initially declined up to September 2020, then rose steadily, peaking at 9.91 in June 2022. After this peak, a decreasing trend is observed with some fluctuations, reaching a lower leverage level of approximately 5.97 by March 2025. This pattern implies an initial increase in reliance on debt or other liabilities, followed by a reduction toward a more conservative leverage position in later periods.

Return on Equity (ROE)

The ROE displayed significant growth from March 2021 through June 2022, rising from 56.23% to a peak of 81.71%. Thereafter, there is a gradual downward trend toward 64.89% by March 2025. Despite this decline, the ROE remains at comparatively high levels throughout, suggesting strong shareholder value creation. This pattern, coupled with changing financial leverage, may indicate a relationship where increased leverage initially bolstered ROE before the company adjusted its capital structure.

In summary, the company's asset efficiency improved steadily, financial leverage increased significantly before tapering off, and shareholder returns peaked mid-period before moderating. These trends together suggest a phase of aggressive financial structuring followed by consolidation and sustained profitability improvements.

Net Profit Margin

The net profit margin data begins with a value of 11.06% in the first quarter of 2021 and shows a gradual decline through the end of 2021, reaching a low of 8.45% in the third quarter of 2022. From that point onward, the margin exhibits a steady recovery trend, increasing consistently and reaching its highest recorded level of 11.63% by the first quarter of 2025. This pattern suggests an initial pressure on profitability followed by a sustained improvement over the subsequent quarters.

Asset Turnover

Asset turnover ratios start at 0.9 in the first quarter of 2021 and generally improve through to the end of 2023, peaking at 1.0 in the fourth quarter of 2023. After this peak, there is a slight downward trend beginning in 2024, with values fluctuating around 0.94 to 0.98 through the first quarter of 2025. Overall, this indicates improving efficiency in asset use up to late 2023, followed by a small decline in the ability to generate sales from assets.

Financial Leverage

Financial leverage started at 6.25 in the first quarter of 2020 and decreased gradually to 4.95 by the third quarter of 2020. From there, leverage increased sharply, reaching a peak of 9.91 by the second quarter of 2022. Subsequently, it declined steadily, falling back to a range between 5.77 and 6.69 from early 2023 through the first quarter of 2025. This suggests a period of increased reliance on debt financing peaking in mid-2022, followed by a notable reduction in leverage levels thereafter.

Return on Equity (ROE)

Return on equity began slightly above 56% in the first quarter of 2021 and rose sharply, peaking around 81.71% in the second quarter of 2022. After this peak, ROE displayed a general downward trend, with fluctuations but a decline through 2023 and beyond, settling in the mid-60% range by the first quarter of 2025. This trajectory indicates a strong enhancement in shareholder returns until mid-2022, followed by a retrenchment consistent with less aggressive leverage and fluctuating profitability.

Summary

The overall financial indicators suggest a dynamic period with initial growth in profitability, efficiency, and leverage up to mid-2022. Following this peak period, there is evidence of a strategic reduction in financial leverage accompanied by stabilization and moderate improvement in profit margins and asset turnover rates. This combination reflects a shift towards more balanced financial management and sustainable returns to equity holders in the more recent periods.

The financial data reveals several important trends over the analyzed quarters. The tax burden ratio shows a generally stable pattern with a slight decreasing trend from around 0.83 in early 2022 to approximately 0.77 by the first quarter of 2025. This suggests a modest improvement in the tax efficiency over time. Similarly, the interest burden ratio remains relatively constant, fluctuating narrowly around 0.87 to 0.89 throughout the periods, indicating stable interest expense management relative to earnings before interest and taxes.

The EBIT margin exhibits an initial decline from about 15.57% in mid-2020 to a low near 11.89% in late 2021. Subsequently, it displays a steady recovery and growth, reaching close to 16.85% by the first quarter of 2025. This upward trend reflects improving operational profitability and better control of operating expenses in recent periods.

Asset turnover generally trends slightly upward from 0.9 in mid-2020 to a peak of 1.0 in mid-2023, followed by a minor decline to approximately 0.94 by early 2025. This indicates a gradual enhancement in the efficiency of using assets to generate revenue, though the slight drop near the end suggests some recent moderation in asset utilization efficiency.

Financial leverage shows marked fluctuations, starting around 6.25 in early 2020, peaking remarkably at 9.91 in mid-2022, and thereafter declining sharply to the 5.7–6.7 range by early 2025. This pattern implies that the company increased its use of debt or other liabilities up to mid-2022, but has since reduced leverage, potentially to lower financial risk or reshape capital structure.

Return on equity (ROE) displays significant volatility, escalating from approximately 56.23% in early 2020 to a peak near 81.71% in mid-2022. Post peak, ROE declines, settling in the mid-60% range through early 2025. Despite the decrease after peak, ROE levels remain robust, reflecting strong profitability and effective use of equity capital over the entire period.

Tax Burden

Generally stable with a slight decline from around 0.83 to 0.77, indicating improved tax efficiency.

Interest Burden

Stable fluctuating narrowly around 0.87 to 0.89, suggesting consistent interest expense management.

EBIT Margin

Declined initially but recovered markedly, reaching higher levels near 16.85%, showing enhanced operational profitability.

Asset Turnover

Gradual increase to 1.0 with minor recent decline, reflecting improved but slightly moderated asset utilization efficiency.

Financial Leverage

Marked increase to nearly 10 followed by a significant reduction, denoting fluctuating debt levels and possible deleveraging strategies.

Return on Equity (ROE)

Sharp rise to over 80%, then moderate decline stabilizing at strong levels around 65%, indicating fluctuating but solid profitability on equity.

Net Profit Margin

The net profit margin displays a generally stable and slightly improving trend over the observed periods. Commencing from the first available data in the period ending March 31, 2020, with a margin of 11.06%, it showed a slight decline through 2021, reaching a low of 8.45% in September 2022. From that point onward, the margin progressively increased, peaking at 11.63% by March 31, 2025. This indicates a recovery and enhancement of profitability relative to revenue over the latter periods.

Asset Turnover

The asset turnover ratio reveals moderate fluctuations without a clear directional trend over the time periods. Starting at 0.90 in March 2020, it increased to a peak of 1.00 by December 2021, reflecting improved efficiency in generating sales from assets. Following that peak, it declined slightly, fluctuating between 0.94 and 0.98, ending at 0.94 in March 2025. These variations indicate stable but not significantly improving operational efficiency.

Return on Assets (ROA)

The return on assets demonstrates variability with an overall upward tendency. The initial figure in March 2020 was 9.95%, rising to a peak of 10.58% in September 2020 before experiencing a decline to a trough of 7.96% in September 2022. Subsequently, ROA improved noticeably, reaching 11.35% by December 2024 before slightly decreasing to 10.88% at the last reported period in March 2025. This pattern suggests episodic challenges in asset profitability with a recovery trend in the final periods.

Tax Burden

The tax burden ratio shows a moderate decline over the observed periods, starting around 0.81 in early 2020 and gradually decreasing to approximately 0.77 by early 2025. This suggests a subtle trend of decreasing tax expense relative to pre-tax earnings over time, indicating potentially improved tax efficiency or favorable changes in tax structure.

Interest Burden

The interest burden ratio remained relatively stable throughout the timeframe, fluctuating narrowly around 0.88 to 0.89. This stability indicates consistent interest expenses relative to operating income, implying no significant changes in debt servicing costs or leverage levels affecting operating income.

EBIT Margin

The EBIT margin experienced some volatility but displayed an overall upward trend. Initially, after a dip from approximately 15.57% in early 2020 to around 11.89% in late 2021, it then rebounded steadily to reach 16.85% by the first quarter of 2025. This improvement indicates enhanced operational profitability, likely driven by improvements in cost management or pricing power.

Asset Turnover

The asset turnover ratio exhibits mild fluctuations within a narrow range, generally oscillating between 0.9 and 1.0. The ratio peaked near 1.00 in early 2023, reflecting efficient use of assets to generate revenues during that period. The slight decline towards the later periods suggests relatively stable but cautious asset utilization levels.

Return on Assets (ROA)

ROA showed a variable but generally increasing pattern. It declined from about 10.58% in late 2020 to a low near 7.96% in late 2021, then improved significantly to peak near 11.35% in late 2024 before slightly decreasing thereafter. This trend implies the company's improving overall profitability from asset use, likely driven by the combined effect of higher EBIT margins and stable asset turnover.

The analyzed financial ratios demonstrate several notable trends over the reported periods. The Tax Burden ratio shows a gradual decline from approximately 0.83 in early 2021 to about 0.77 by the end of 2023, followed by relative stability with minor fluctuations hovering around 0.77 to 0.78 through the first quarter of 2025. This decrease suggests a gradually reduced tax expense relative to pre-tax income over time.

The Interest Burden ratio remains relatively stable throughout the periods, maintaining values close to 0.88 to 0.89. Minimal variation indicates consistent management of interest expenses relative to earnings before interest and taxes without significant financial leverage shifts or increased interest costs.

The EBIT Margin exhibits some volatility with a declining trend from about 15.57% in early 2020 to a low near 11.89% in the third quarter of 2022. Subsequently, there is a recovery and upward trend that reaches approximately 16.85% by the first quarter of 2025. This pattern suggests an initial compressing of operating profitability followed by improved operational efficiency or revenue growth resulting in expanding earnings before interest and taxes as a percentage of sales.

The Net Profit Margin follows a similar trajectory to the EBIT Margin. Starting around 11.06% in the early available periods, it decreases to a low near 8.45% in late 2022, then progressively increases, reaching close to 11.63% by the first quarter of 2025. The recovery in net profitability aligns with the improved EBIT Margin and the relatively stable burden ratios, indicating an overall enhancement in the company’s ability to convert revenue into net income.

Overall, the data reveal a period of margin contraction followed by a steady recovery in profitability metrics. The operating and net margins show resilience and growth over the latter periods, while the tax and interest burdens remain stable or slightly decrease, supporting improved net profitability.