Sherwin-Williams Co. (NYSE:SHW)

The net fixed asset turnover ratio demonstrates a marked declining trend beginning in the first quarter of 2021. Initially steady around 10.0 to 10.88, it gradually drops each quarter, reaching 6.29 by the first quarter of 2025. This consistent decrease suggests a reduced efficiency in generating sales from fixed assets over this period.

When including operating leases and right-of-use assets, the net fixed asset turnover follows a similar downward trajectory but at approximately half the magnitude of the standard fixed asset turnover ratio. Starting at 5.11 in the first quarter of 2021, it declines steadily to 4.09 by the first quarter of 2025, indicating a consistent yet less pronounced decrease in asset efficiency adjusted for leased assets.

Total asset turnover exhibits relative stability over the observed quarters, fluctuating within a narrow band around 0.9 to 1.0. Beginning slightly below 0.9 in early 2020, it rises gradually to a peak of 1.00 around the last quarters of 2022 and early 2023, before experiencing a mild decline back to 0.94 by the first quarter of 2025. This indicates generally consistent efficiency in utilizing total assets to generate revenue, with minor variations.

Equity turnover shows more variability and an overall decreasing trend from mid-2021 onward. After an increase from 5.09 to a peak of 9.34 in late 2021, equity turnover falls substantially to 5.58 by the first quarter of 2025. This volatility and subsequent decline could point to changes in equity financing or variations in net income relative to shareholder equity.

The quarterly financial data reveals several notable trends concerning sales performance, fixed asset investment, and asset utilization efficiency over the period analyzed.

Net Sales

Net sales display a pattern of growth with some fluctuations. Starting from approximately 4.15 billion USD in the first quarter of 2020, sales rose to peak around mid-2022, surpassing 6 billion USD in multiple quarters. However, there is evident variability as sales experience declines in some quarters following their peaks. From early 2023 onward, sales remain generally elevated relative to the 2020 baseline but do not exhibit consistent upward momentum, indicating possibly cyclical or market-related influences affecting revenue generation.

Property, Plant and Equipment, Net

The net book value of property, plant, and equipment shows a clear and steady increase over the timeframe. Starting at roughly 1.83 billion USD in early 2020, it rises to over 3.66 billion USD by the first quarter of 2025. This represents a significant investment in fixed assets, more than doubling over five years. The consistent upward trajectory suggests ongoing capital expenditure, potentially for expansion, modernization, or capacity enhancement purposes.

Net Fixed Asset Turnover Ratio

The net fixed asset turnover ratio, which measures the efficiency of fixed assets in generating net sales, shows a pronounced decline. From a high ratio above 10 in late 2020 and early 2021, the ratio steadily decreases to approximately 6.3 by early 2025. This decline implies that net sales are growing at a slower pace relative to increases in fixed assets or that assets are underutilized. The decreasing turnover could reflect lagging sales growth in response to the rising fixed asset base or a strategic focus on long-term capacity build-out ahead of immediate sales growth.

In summary, the data indicates a company investing heavily in fixed assets while experiencing fluctuating but generally increased net sales. The diminishing net fixed asset turnover ratio points toward either expanding capacity not yet fully leveraged or a relative slowdown in sales growth compared to capital investments. This pattern warrants attention regarding asset utilization and the effectiveness of capital expenditure in sustaining revenue growth.

Net Sales

Net sales exhibited a generally fluctuating pattern over the analyzed periods. Starting at approximately 4,146,700 thousand US dollars in March 2020, sales increased steadily to reach a peak of 6,247,600 thousand US dollars in June 2023. Post this peak, a decline followed, with net sales dropping to around 5,305,700 thousand US dollars by March 2025. Notable growth phases occurred between March 2021 and June 2022, with several quarters witnessing significant increases, indicating periods of strong revenue generation. However, the latter quarters after mid-2023 saw a downward trend, suggesting a possible slowdown or seasonal variation.

Property, Plant, and Equipment, Net (including operating lease, right-of-use asset)

This asset category showed a consistent upward trajectory throughout the entire period. Beginning at 3,512,900 thousand US dollars in March 2020, the net value of fixed assets progressively increased each quarter, ending at approximately 5,636,300 thousand US dollars by March 2025. The growth was steady without any significant downturns, reflecting ongoing investment or capital expenditure in physical assets and lease rights. This trend suggests a focus on expanding or maintaining operational capacity.

Net Fixed Asset Turnover (including operating lease, right-of-use asset)

The net fixed asset turnover ratio, available from December 2020 onwards, displayed a declining trend over time. Initially, the ratio was 5.11, reaching its highest point at 5.57 in December 2021, indicating efficient use of fixed assets to generate sales during this period. However, following this peak, the ratio consistently decreased each quarter to a value of 4.09 by March 2025. This decreasing ratio suggests a reduction in the efficiency with which the company utilized its fixed assets to produce sales, possibly due to the increased asset base growing faster than sales or decreasing operational efficiency in asset deployment.

Net Sales

Over the observed periods, net sales demonstrate a general upward trend with some fluctuations. Starting at approximately 4.15 billion US dollars in the first quarter of 2020, net sales increased steadily to peak around 6.27 billion US dollars in the third quarter of 2024. This suggests a positive revenue growth over the longer term. However, there are notable periodic declines, particularly visible toward the end of 2021 and 2023, indicating some variability in sales performance on a quarterly basis.

Total Assets

Total assets exhibit a gradual, consistent growth trajectory from roughly 20.57 billion US dollars in the first quarter of 2020 to about 24.64 billion US dollars by the first quarter of 2025. The data shows a steady accumulation of assets over time, suggesting ongoing investment or asset retention strategies. While the growth is relatively moderate, the general upward trend points to expanding resource capacity or capital base.

Total Asset Turnover

The total asset turnover ratio, available from the third quarter of 2020 onward, fluctuates within a relatively narrow range around 0.9 to 1.0. Specifically, it begins near 0.9, peaks at 1.0 in the first quarter of 2023, and remains close to 0.94 by the first quarter of 2025. This ratio indicates how effectively assets are being utilized to generate sales; thus, the data suggests a relatively stable efficiency level in asset use, with slight improvement and subsequent modest decline. The peak near 1.0 indicates periods of efficient asset utilization, while dips below this mark reflect minor decreases in operational efficiency.

The analyzed financial data reveals several notable trends across the reported periods. Net sales exhibit a generally increasing pattern from the first quarter of 2020 through various fluctuations extending into 2025. Beginning at approximately 4.15 billion US dollars in March 2020, net sales demonstrated growth, rising to peaks exceeding 6 billion US dollars around mid-2023 and mid-2024 before experiencing some decline toward early 2025. This indicates a cyclical sales environment, with periods of growth followed by moderation.

Shareholders’ equity, in contrast, presents a declining trend in the initial years, particularly from early 2020 through 2022, where equity decreased from roughly 3.29 billion to approximately 2.22 billion US dollars. However, a reversal occurs starting in late 2022, with equity levels recovering steadily, reaching around 4.13 billion by March 2025. This suggests a recovery phase or positive capital changes after earlier reductions in equity.

Examining equity turnover, data is only partially available beginning in the third quarter of 2020. Initially, the ratio increased sharply from about 5.09 to a peak of 9.34 in late 2022, reflecting improved efficiency in using equity to generate revenue during this period. Following this peak, a gradual decline occurs, reducing the ratio to a range around 5.55 to 6.56 from late 2023 through 2025, indicating a moderation in equity utilization efficiency.

Net Sales

Steady growth with intermittent declines, peaking near mid-2023 and mid-2024, followed by a modest downturn toward early 2025.

Shareholders’ Equity

Initial downward trajectory until 2022, succeeded by a sustained recovery phase leading to levels surpassing those at the start of the period by 2025.

Equity Turnover

Marked improvement in utilization efficiency up to late 2022, followed by gradual normalization into moderate turnover levels through 2025.

Overall, these data indicate a business experiencing growth in sales with some volatility, an initial reduction in equity possibly due to economic challenges or strategic changes, and a later phase of equity recovery. The efficiency of equity usage expanded significantly before slightly correcting to balanced levels, pointing toward adaptive financial management practices in response to evolving market conditions.