Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Cash Flow Statement
- Common-Size Income Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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Profitability Ratios (Summary)
Sherwin-Williams Co., profitability ratios
Based on: 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), 10-K (reporting date: 2020-12-31).
- Gross Profit Margin
- The gross profit margin exhibited a declining trend from 47.29% in 2020 to 42.1% in 2022, indicating a reduction in the percentage of revenue remaining after deducting the cost of goods sold. However, this trend reversed in the subsequent years, rising to 46.67% in 2023 and further to 48.47% in 2024, suggesting improved efficiency or pricing strategies impacting the cost structure favorably towards the end of the period.
- Operating Profit Margin
- The operating profit margin showed a decrease from 15.58% in 2020 to 12.83% in 2021, followed by a moderate rebound to 13.56% in 2022. The margin then continued to improve steadily, reaching 15.48% in 2023 and 16.5% in 2024. This pattern reflects an initial decline in operating efficiency or higher operating expenses, with subsequent operational improvements or cost controls leading to increased profitability from core operations.
- Net Profit Margin
- Net profit margin declined from 11.06% in 2020 to 9.12% in 2022, indicating a reduction in overall profitability after all expenses and taxes. However, it improved thereafter, rising to 10.36% in 2023 and 11.61% in 2024, surpassing the 2020 level. This recovery and growth suggest improved bottom-line performance potentially due to better operational efficiency, cost management, or favorable financial activities.
- Return on Equity (ROE)
- Return on equity showed considerable volatility, increasing sharply from 56.23% in 2020 to a peak of 76.5% in 2021, before falling to 65.12% in 2022 and hovering slightly lower at 64.29% in 2023. It then regained some strength to 66.19% in 2024. These fluctuations may reflect changes in net income relative to shareholders’ equity and potentially altered capital structures, but overall ROE remained at a high level throughout, indicating strong returns for shareholders.
- Return on Assets (ROA)
- Return on assets declined modestly from 9.95% in 2020 to a low of 8.94% in 2022. Following this period, ROA increased to 10.41% in 2023 and further to 11.35% in 2024. This suggests that asset utilization efficiency weakened initially but subsequently improved, reflecting better management of asset resources to generate profits in the latter years.
Return on Sales
Return on Investment
Gross Profit Margin
Sherwin-Williams Co., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Gross Profit
- The gross profit exhibited a generally positive upward trend over the five-year period. Starting from approximately 8.68 billion US dollars in 2020, there was a slight decrease in 2021 to about 8.54 billion. However, this was followed by consistent growth in subsequent years, reaching approximately 11.2 billion US dollars by 2024. This indicates an improvement in the company's ability to generate profit from its core operations despite minor fluctuation early in the period.
- Net Sales
- Net sales showed a steady increase year over year from 18.36 billion US dollars in 2020 to roughly 23.1 billion US dollars in 2023, with a marginal rise to about 23.1 billion in 2024. The growth rate moderated in the final year, suggesting a potential stabilization in revenue generation at this level. The overall increase reflects expanding market activity or pricing power over the observed period.
- Gross Profit Margin
- The gross profit margin percentage declined from 47.29% in 2020 to 42.10% in 2022, indicating a reduction in profitability relative to sales during the initial years. Nevertheless, there was a notable recovery in 2023 and 2024, with margins increasing to 46.67% and further to 48.47% respectively, surpassing the margin observed at the start of the period. This improvement suggests enhanced operational efficiency or favorable cost management in recent years.
- Summary
- The data illustrates that while net sales steadily increased, gross profit initially decreased in 2021 before recovering and growing strongly through to 2024. The gross profit margin profile similarly reflects initial margin compression followed by a recovery and expansion beyond the starting level. These trends may indicate successful strategic adjustments that improved profitability despite earlier pressures on margins.
Operating Profit Margin
Sherwin-Williams Co., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Operating Profit Margin, Sector | ||||||
| Chemicals | ||||||
| Operating Profit Margin, Industry | ||||||
| Materials | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- The operating income exhibits a fluctuating but generally upward trend over the five-year period. It decreased from approximately 2,861.3 million US dollars in 2020 to 2,558.9 million US dollars in 2021, reflecting a decline in that year. Following this dip, the operating income increased steadily, reaching about 3,002.9 million US dollars in 2022, 3,567.7 million US dollars in 2023, and finally 3,811.8 million US dollars in 2024. This recovery and subsequent growth suggest improved operational efficiency or cost management after 2021.
- Net Sales
- Net sales demonstrate a consistent growth pattern from 2020 through 2023, starting at approximately 18,361.7 million US dollars in 2020 and rising each year to 19,944.6 million in 2021, 22,148.9 million in 2022, and 23,051.9 million in 2023. However, in 2024, net sales stagnated, showing a marginal increase to about 23,098.5 million US dollars. This plateau may indicate market saturation or other external factors limiting revenue expansion.
- Operating Profit Margin
- The operating profit margin reflects variations consistent with operating income trends. Initially, there was a decline from 15.58% in 2020 to 12.83% in 2021, marking a notable reduction in profitability. Afterwards, operating margin improved steadily, rising to 13.56% in 2022, then gaining further strength to 15.48% in 2023, and reaching the highest point of 16.5% in 2024. This improvement in margin after 2021 suggests enhanced cost control or pricing strategies leading to greater profitability relative to sales.
- Overall Analysis
- The financial data indicate a challenging year in 2021 with reductions in both operating income and profit margin despite increased net sales. The subsequent years show recovery and growth in operating income and profitability margins, while net sales continue to climb until leveling off in 2024. The positive trajectory in operating profit margin in the last two years highlights better operational leverage or efficiency. The near stabilization of net sales in 2024 suggests a need to investigate demand factors or market conditions impacting revenue growth.
Net Profit Margin
Sherwin-Williams Co., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Net Profit Margin, Sector | ||||||
| Chemicals | ||||||
| Net Profit Margin, Industry | ||||||
| Materials | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income showed a fluctuating but overall positive trend over the five-year period. After a decline from 2,030,400 thousand US dollars in 2020 to 1,864,400 thousand US dollars in 2021, the net income rebounded in subsequent years, reaching 2,681,400 thousand US dollars by 2024. This indicates improved profitability after a slight setback in 2021.
- Net Sales
- Net sales exhibited consistent growth throughout the period, increasing from 18,361,700 thousand US dollars in 2020 to 23,098,500 thousand US dollars in 2024. The growth rate was particularly strong between 2020 and 2022, followed by a slower increase from 2022 to 2024, suggesting a maturing revenue base.
- Net Profit Margin
- The net profit margin experienced a decrease from 11.06% in 2020 to 9.12% in 2022, implying a reduction in profitability relative to sales during this period. However, this trend reversed in 2023 and 2024, with margins climbing to 10.36% and then 11.61%, respectively, surpassing the starting point in 2020. This improvement signals enhanced operational efficiency or cost management leading to higher profitability per unit of sales.
Return on Equity (ROE)
Sherwin-Williams Co., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Linde plc | ||||||
| ROE, Sector | ||||||
| Chemicals | ||||||
| ROE, Industry | ||||||
| Materials | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Trends
- Net income shows a fluctuating yet overall upward trend over the five-year period. Starting at 2,030,400 thousand US dollars in 2020, it declines in 2021 to 1,864,400 thousand, followed by a recovery in 2022 to 2,020,100 thousand. Subsequently, net income rises significantly in 2023 and 2024, reaching 2,388,800 thousand and 2,681,400 thousand respectively, indicating improving profitability in the latter years.
- Shareholders' Equity Trends
- Shareholders’ equity experiences variability across the years. It begins at 3,610,800 thousand US dollars in 2020, drops sharply to 2,437,200 thousand in 2021, then recovers in 2022 to 3,102,100 thousand. The upward momentum continues through 2023 and 2024, with equity reaching 3,715,800 thousand and 4,051,200 thousand respectively. This pattern suggests periods of equity reduction followed by substantial growth, perhaps reflecting retained earnings accumulation or capital injections after 2021.
- Return on Equity (ROE) Analysis
- The ROE metric demonstrates significant fluctuations but maintains a generally high level throughout the period. The value starts at 56.23% in 2020 and increases sharply to 76.5% in 2021, despite the drop in absolute net income and equity, possibly indicating a more efficient use of equity in that year. ROE then decreases to 65.12% in 2022 and slightly declines to 64.29% in 2023 before rising again to 66.19% in 2024. These levels highlight consistent strong returns on shareholders’ equity, albeit with some volatility linked to the changes in net income and equity base.
- Overall Insights
- Across the observed period, the company's profitability, as measured by net income, rebounds strongly after a dip in 2021 and reaches new highs by 2024. Shareholders’ equity mirrors this recovery trend, suggesting a rebuilding phase after 2021. ROE remains robust throughout, reflecting effective capital utilization even during times of equity contraction. The interplay of these factors may indicate strategic adjustments or market conditions influencing financial performance, with a notable recovery and growth trajectory in recent years.
Return on Assets (ROA)
Sherwin-Williams Co., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Linde plc | ||||||
| ROA, Sector | ||||||
| Chemicals | ||||||
| ROA, Industry | ||||||
| Materials | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial performance demonstrates notable trends over the examined periods. Net income exhibited a general upward trajectory, with a decline observed in the year ending December 31, 2021, followed by continuous growth through 2024. Total assets gradually increased throughout the entire span, indicating a steady expansion in asset base.
Return on assets (ROA) shows a decrease from 9.95% in 2020 to 8.94% in 2022, suggesting a slight reduction in asset efficiency during this time. However, ROA improved significantly in the subsequent years, reaching 11.35% by the end of 2024, reflecting enhanced profitability relative to asset holdings.
- Net Income
- Initially decreased from 2,030,400 thousand US dollars in 2020 to 1,864,400 thousand US dollars in 2021.
- Recovered and increased steadily to reach 2,681,400 thousand US dollars in 2024.
- Total Assets
- Consistently increased from 20,401,600 thousand US dollars in 2020 to 23,632,600 thousand US dollars in 2024.
- The growth suggests ongoing investment and asset accumulation.
- Return on Assets (ROA)
- Decreased from 9.95% in 2020 to a low of 8.94% in 2022, indicating a temporary dip in asset utilization efficiency.
- Improved to 11.35% by 2024, pointing to better operational effectiveness and profitability.