Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Sherwin-Williams Co., profitability ratios
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 profitability metrics demonstrate a generally positive trend over the five-year period, with some moderation in the most recent year. Gross profit margin, operating profit margin, and net profit margin all exhibited improvement from 2021 to 2024, before experiencing a slight pullback in 2025. Return on equity showed volatility, while return on assets generally increased before declining in the final year.
- Gross Profit Margin
- The gross profit margin increased consistently from 42.83% in 2021 to 48.85% in 2025. This indicates improving efficiency in production or sourcing, or potentially increased pricing power. The increase from 46.67% in 2023 to 48.47% in 2024 was particularly notable, suggesting a strong performance in that year. The slight decrease to 48.85% in 2025, while still high, warrants further investigation.
- Operating Profit Margin
- Similar to the gross profit margin, the operating profit margin showed an upward trajectory from 12.83% in 2021 to 16.50% in 2024. This suggests effective management of operating expenses alongside revenue growth. A modest decline to 16.17% in 2025 indicates potential pressure on operating costs or a slowdown in revenue expansion.
- Net Profit Margin
- The net profit margin followed the same pattern as the other margin metrics, rising from 9.35% in 2021 to 11.61% in 2024, and then decreasing to 10.90% in 2025. This suggests that improvements in profitability at the gross and operating levels translated to gains at the net income level. The 2025 decrease could be attributed to factors such as increased interest expense or a higher effective tax rate.
- Return on Equity (ROE)
- Return on equity experienced a significant decrease from 76.50% in 2021 to 65.12% in 2022, followed by relative stability around the mid-60s for 2022 and 2023. It then increased to 66.19% in 2024 before falling to 55.86% in 2025. This volatility suggests changes in the company’s capital structure or net income that significantly impacted shareholder returns. The substantial decline in 2025 is a key area for further analysis.
- Return on Assets (ROA)
- Return on assets demonstrated a consistent increase from 9.02% in 2021 to 11.35% in 2024, indicating improved efficiency in utilizing assets to generate profit. However, a decrease to 9.92% in 2025 suggests a potential decline in asset efficiency or profitability. This decrease, while not as dramatic as the ROE decline, aligns with the moderation observed in the margin metrics.
Overall, the period from 2021 to 2024 was characterized by improving profitability across all measured ratios. The year 2025, however, showed a slight reversal of this trend, indicating potential challenges or shifts in the business environment. Further investigation is recommended to understand the drivers behind the 2025 performance and assess the sustainability of the earlier positive trends.
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Return on Sales
Return on Investment
Gross Profit Margin
Sherwin-Williams Co., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 11,515,500) | 11,195,100) | 10,758,100) | 9,325,100) | 8,542,700) | |
| Net sales | 23,574,300) | 23,098,500) | 23,051,900) | 22,148,900) | 19,944,600) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 48.85% | 48.47% | 46.67% | 42.10% | 42.83% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Linde plc | 48.83% | 48.06% | 46.76% | 41.70% | 43.03% | |
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).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 11,515,500 ÷ 23,574,300 = 48.85%
2 Click competitor name to see calculations.
The gross profit margin exhibited a generally positive trend over the five-year period. While initially experiencing a slight decrease, the metric demonstrated consistent improvement in subsequent years, reaching its highest point in the final year observed.
- Gross Profit
- Gross profit increased steadily from US$8,542,700 thousand in 2021 to US$11,515,500 thousand in 2025. The rate of increase was most pronounced between 2022 and 2023, slowing somewhat in the following two years.
- Net Sales
- Net sales also increased over the period, rising from US$19,944,600 thousand in 2021 to US$23,574,300 thousand in 2025. However, the growth in net sales was less consistent than that of gross profit, with a notably smaller increase between 2023 and 2024.
- Gross Profit Margin
- The gross profit margin began at 42.83% in 2021, decreasing to 42.10% in 2022. A significant increase was then observed, with the margin reaching 46.67% in 2023. This upward trend continued, with the margin further improving to 48.47% in 2024 and 48.85% in 2025. The consistent improvement in the gross profit margin suggests increasing efficiency in production or sourcing, or a shift towards higher-margin products, despite fluctuations in net sales growth.
The divergence between the growth rates of gross profit and net sales, particularly in the later years, contributed to the observed increase in the gross profit margin. This indicates that the company was able to generate a greater proportion of profit from each dollar of sales over time.
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Operating Profit Margin
Sherwin-Williams Co., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | 3,812,900) | 3,811,800) | 3,567,700) | 3,002,900) | 2,558,900) | |
| Net sales | 23,574,300) | 23,098,500) | 23,051,900) | 22,148,900) | 19,944,600) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 16.17% | 16.50% | 15.48% | 13.56% | 12.83% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Linde plc | 26.25% | 26.16% | 24.42% | 16.09% | 16.19% | |
| Operating Profit Margin, Sector | ||||||
| Chemicals | 22.13% | 22.19% | 20.73% | 15.08% | 14.87% | |
| Operating Profit Margin, Industry | ||||||
| Materials | 23.07% | 23.68% | 22.62% | 19.68% | 21.62% | |
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).
1 2025 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 3,812,900 ÷ 23,574,300 = 16.17%
2 Click competitor name to see calculations.
The operating profit margin demonstrates a clear upward trend over the five-year period, followed by a slight deceleration in the most recent year. Operating income consistently increased, though at a varying rate, while net sales also exhibited growth, contributing to the margin expansion.
- Operating Profit Margin Trend
- The operating profit margin increased from 12.83% in 2021 to 16.50% in 2024, representing a substantial improvement in profitability. This indicates that the company became increasingly efficient at converting sales into operating profits. However, in 2025, the margin experienced a slight decrease to 16.17%, suggesting a potential stabilization or the beginning of a plateau.
- Operating Income Growth
- Operating income grew from US$2,558,900 thousand in 2021 to US$3,811,800 thousand in 2024, showing consistent year-over-year increases. The rate of growth slowed between 2024 and 2025, with operating income remaining relatively flat at US$3,812,900 thousand. This suggests that while the company continues to generate significant operating income, further substantial gains may be more challenging to achieve.
- Net Sales Growth
- Net sales increased from US$19,944,600 thousand in 2021 to US$23,574,300 thousand in 2025. The growth rate in net sales was not consistent across all years, with a more pronounced increase between 2021 and 2022, followed by more moderate growth in subsequent years. The relatively stable net sales between 2024 and 2025, coupled with the slight decrease in operating profit margin, warrants further investigation into cost structures.
The observed trend suggests effective management of operating costs relative to sales for the majority of the period. The stabilization of both operating income and net sales, combined with the marginal decline in operating profit margin in 2025, indicates a need to monitor future performance closely to determine if this represents a temporary fluctuation or a more significant shift in the company’s profitability.
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Net Profit Margin
Sherwin-Williams Co., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 2,568,500) | 2,681,400) | 2,388,800) | 2,020,100) | 1,864,400) | |
| Net sales | 23,574,300) | 23,098,500) | 23,051,900) | 22,148,900) | 19,944,600) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 10.90% | 11.61% | 10.36% | 9.12% | 9.35% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Linde plc | 20.30% | 19.89% | 18.87% | 12.43% | 12.42% | |
| Net Profit Margin, Sector | ||||||
| Chemicals | 16.45% | 16.48% | 15.36% | 11.11% | 11.22% | |
| Net Profit Margin, Industry | ||||||
| Materials | 13.98% | 13.65% | 13.25% | 12.31% | 13.59% | |
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).
1 2025 Calculation
Net profit margin = 100 × Net income ÷ Net sales
= 100 × 2,568,500 ÷ 23,574,300 = 10.90%
2 Click competitor name to see calculations.
The net profit margin exhibited a generally positive trend over the five-year period. Initial values indicate a margin of 9.35% in 2021, followed by a slight decrease to 9.12% in 2022. Subsequent years demonstrate consistent improvement, peaking at 11.61% in 2024 before experiencing a modest decline to 10.90% in 2025.
- Net Profit Margin Trend
- From 2021 to 2022, the net profit margin decreased by 0.23 percentage points. This suggests a potential increase in costs or a decrease in revenue growth relative to costs during this period. However, the margin then increased significantly over the following two years, growing from 9.12% in 2022 to 11.61% in 2024, representing a 2.49 percentage point improvement. This indicates enhanced profitability, potentially driven by improved operational efficiency, pricing strategies, or a favorable shift in product mix.
- The slight decrease in net profit margin observed in 2025, from 11.61% to 10.90%, warrants further investigation. While still a strong margin, the reduction could signal emerging cost pressures or increased competition. The magnitude of this decrease is relatively small, suggesting the underlying profitability remains robust.
The observed fluctuations in net profit margin correlate with changes in both net income and net sales. While both metrics generally increased over the period, the rate of increase in net income outpaced that of net sales between 2022 and 2024, contributing to the margin expansion. The slower growth in net income in 2025, coupled with continued growth in net sales, resulted in the marginal decrease in the net profit margin.
- Relationship to Net Income and Net Sales
- Net income increased from US$1,864,400 thousand in 2021 to US$2,681,400 thousand in 2024, before decreasing slightly to US$2,568,500 thousand in 2025. Net sales also demonstrated growth, rising from US$19,944,600 thousand in 2021 to US$23,574,300 thousand in 2025. The consistent growth in both metrics indicates a healthy overall business performance.
Overall, the net profit margin demonstrates a positive trajectory with a recent stabilization. Continued monitoring of cost structures and revenue growth will be crucial to understanding the sustainability of these margins.
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Return on Equity (ROE)
Sherwin-Williams Co., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 2,568,500) | 2,681,400) | 2,388,800) | 2,020,100) | 1,864,400) | |
| Shareholders’ equity | 4,598,300) | 4,051,200) | 3,715,800) | 3,102,100) | 2,437,200) | |
| Profitability Ratio | ||||||
| ROE1 | 55.86% | 66.19% | 64.29% | 65.12% | 76.50% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Linde plc | 18.04% | 17.23% | 15.61% | 10.36% | 8.69% | |
| ROE, Sector | ||||||
| Chemicals | 22.10% | 21.94% | 19.77% | 14.30% | 12.24% | |
| ROE, Industry | ||||||
| Materials | 18.90% | 18.64% | 17.36% | 16.42% | 16.54% | |
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).
1 2025 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 2,568,500 ÷ 4,598,300 = 55.86%
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited fluctuating performance over the five-year period. Net income generally increased from 2021 to 2023, followed by a slight decrease in 2025, while shareholders’ equity consistently rose throughout the period. These movements influenced the observed ROE trends.
- Overall Trend
- The ROE demonstrated an initial decline from 2021 to 2022, followed by relative stability between 2022 and 2024, and then a noticeable decrease in 2025. The highest ROE was recorded in 2021 at 76.50%, while the lowest was in 2025 at 55.86%.
- 2021 to 2022
- A decrease in ROE is observed from 76.50% in 2021 to 65.12% in 2022. This decline occurred despite an increase in net income. The more substantial growth in shareholders’ equity during this period appears to be the primary driver of the reduced ROE, indicating that the company was reinvesting earnings or raising capital, thereby increasing the equity base against which net income was measured.
- 2022 to 2024
- From 2022 to 2024, the ROE remained relatively stable, fluctuating between 64.29% and 66.19%. Net income increased during this timeframe, and shareholders’ equity continued to grow, but the increases were proportionally balanced, resulting in minimal change to the ROE. This suggests a consistent level of profitability relative to the equity invested.
- 2024 to 2025
- A decrease in ROE is apparent from 66.19% in 2024 to 55.86% in 2025. While shareholders’ equity continued its upward trend, net income experienced a slight decline. This combination of increased equity and decreased income contributed to the most significant reduction in ROE over the observed period.
In summary, the ROE trend suggests a period of high profitability in 2021, followed by a period of stable, but slightly lower, returns, and ultimately a more pronounced decrease in 2025. The changes in ROE appear to be influenced by the interplay between net income and shareholders’ equity, with equity growth playing a significant role in moderating the ROE.
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Return on Assets (ROA)
Sherwin-Williams Co., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 2,568,500) | 2,681,400) | 2,388,800) | 2,020,100) | 1,864,400) | |
| Total assets | 25,901,700) | 23,632,600) | 22,954,400) | 22,594,000) | 20,666,700) | |
| Profitability Ratio | ||||||
| ROA1 | 9.92% | 11.35% | 10.41% | 8.94% | 9.02% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Linde plc | 7.95% | 8.19% | 7.67% | 5.21% | 4.69% | |
| ROA, Sector | ||||||
| Chemicals | 8.40% | 8.91% | 8.28% | 6.03% | 5.56% | |
| ROA, Industry | ||||||
| Materials | 6.83% | 7.02% | 6.68% | 6.28% | 6.65% | |
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).
1 2025 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 2,568,500 ÷ 25,901,700 = 9.92%
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a fluctuating pattern over the five-year period. Initial values demonstrated a slight decrease, followed by substantial improvement, and then a modest decline.
- Overall Trend
- The ROA began at 9.02% in 2021, decreasing slightly to 8.94% in 2022. A significant increase was then observed, with the ROA reaching 10.41% in 2023 and peaking at 11.35% in 2024. The most recent year, 2025, shows a decrease to 9.92%.
- Year-over-Year Changes
- From 2021 to 2022, the ROA experienced a minor reduction of 0.08 percentage points. The period from 2022 to 2023 saw a substantial improvement of 1.47 percentage points. The largest year-over-year increase occurred between 2023 and 2024, with a gain of 0.94 percentage points. Finally, from 2024 to 2025, the ROA decreased by 1.43 percentage points.
- Relationship to Net Income and Total Assets
- The increase in ROA from 2022 to 2024 aligns with increases in net income. While total assets also increased during this period, the growth in net income outpaced the growth in assets, resulting in a higher ROA. The decline in ROA in 2025 corresponds with a slower growth rate in net income, coupled with a continued increase in total assets.
- Peak and Recent Performance
- The highest ROA value was recorded in 2024 at 11.35%. While still representing a solid return, the 2025 ROA of 9.92% indicates a potential shift in the company’s asset utilization efficiency or profitability relative to its asset base.
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