Sherwin-Williams Co. (NYSE:SHW)

Gross Profit Margin

The gross profit margin demonstrates an initial decline from 47.29% in March 2021 to a low of 41.01% in September 2022. Following this trough, a steady recovery trend is observed, reaching 48.72% by March 2025. This suggests an improvement in cost management or pricing strategy over time.

Operating Profit Margin

Operating profit margin follows a similar trajectory to the gross profit margin. It decreases from 15.58% in March 2021 down to 11.94% in September 2022, then gradually increases to 16.66% by March 2025. This pattern indicates that operational efficiency declined initially but improved significantly toward the end of the period under review.

Net Profit Margin

Net profit margin declines from 11.06% in March 2021 to a low of 8.45% in September 2022. It subsequently recovers, reaching 11.63% by March 2025. The net margin reflects the pattern seen in operating margins, signaling improvements in overall profitability after a period of compression.

Return on Equity (ROE)

ROE exhibits considerable volatility, rising sharply from 56.23% in March 2021 to a peak of 81.71% in June 2022, followed by a steady decline to 61.54% in September 2024, before a slight recovery to 64.89% by March 2025. This volatility may indicate fluctuations in leverage, profit retention, or equity levels affecting shareholder returns.

Return on Assets (ROA)

ROA shows a moderate increasing trend with fluctuations; it starts at 9.95% in March 2021, dips to 7.96% in September 2022, and then rises to a peak of 11.35% in September 2024 before slightly decreasing to 10.88% in March 2025. This suggests improving asset utilization efficiency after the mid-period dip.

Gross Profit Trend

The gross profit exhibits a fluctuating but overall upward trend from the first quarter of 2020 through the first quarter of 2025. Starting at approximately $1.89 billion in March 2020, gross profit peaks multiple times, notably around mid-2023 and mid-2024, reaching over $3 billion by June and September 2024. There are intermittent declines, such as at the end of 2020 and early 2021, but the general long-term trend indicates growth in gross profit figures.

Net Sales Trend

Net sales also display an increasing trend over the observed period. Beginning around $4.15 billion in March 2020, net sales rise steadily with some volatility. There is a significant jump by mid-2022, where sales surpass $6 billion for several quarters between 2022 and 2024. The peak sales are recorded in June 2024, just above $6.27 billion, followed by a slight decrease towards early 2025, although remaining above the earlier 2020 levels consistently.

Gross Profit Margin Progression

The gross profit margin percentage exhibits a clear upward trajectory over the reported quarters, starting from about 42.83% in March 2021 and climbing steadily to reach nearly 48.7% by March 2025. This improvement suggests enhanced efficiency or better pricing power over time, as gross profit grows at a faster rate relative to net sales. The margin increases are consistent, with no significant reversals, indicating sustained profitability improvements.

Relationship Between Gross Profit, Net Sales, and Margin

Both gross profit and net sales increase over time, but the gross profit margin's steady rise highlights an increasing ability to convert sales into profit. While sales show some variability, gross profit margin gains indicate operational or pricing improvements, possibly through cost management or higher-value product mix. This data implies the company is not only growing in size but improving profitability efficiency concurrently.

Short-term Fluctuations

There are periodic fluctuations coinciding with seasonal quarters, notably some dips in gross profit and sales during the late quarters of certain years (e.g., Q4 2020 and Q4 2021). Despite these dips, the overall trends remain positive, which may reflect typical business cycles or market conditions influencing quarterly outcomes without derailing long-term growth.

Operating Income

Operating income demonstrates significant fluctuations throughout the reported periods. Starting at 500.3 million US dollars in March 2020, the figure peaked at 959.3 million by September 2020, followed by a notable decline to 372.9 million by December 2021. From 2022 onward, a recovery trend is evident, with operating income increasing to highs above 1.11 billion by June and September 2023. The most recent quarters show continued strength, with values frequently exceeding 1.13 billion and occasionally dipping below 700 million, indicating some volatility but an overall upward trajectory over the full timeframe.

Net Sales

Net sales exhibit an overall growth pattern with periodic dips corresponding generally to declines in operating income. The initial value in March 2020 was approximately 4.15 billion US dollars, increasing steadily to 5.12 billion by September 2020. Subsequent quarters reflect oscillations, with peaks in mid-2022 reaching around 6.04 billion and another peak in mid-2023 above 6.24 billion. Despite some declines, the general trend over five years points to increased sales volume, though the last few quarters show a slight decrease, hovering around 5.3 billion US dollars.

Operating Profit Margin

The operating profit margin data available from March 2020 onward indicates a consistent improvement trend. Beginning around 12.49% in late 2020, the margin gradually improves, reaching a peak above 16.66% in the latest period. Margins experience minor volatility but maintain a general upward trajectory, suggesting enhanced operational efficiency or cost controls over time. This improvement in margin complements the rising absolute values of operating income despite the variable sales levels.

Net Income

The net income exhibits notable volatility across the reported periods. It started at 321,700 thousand USD in March 2020 and showed a significant rise, peaking at 705,800 thousand USD in September 2020. This was followed by a decline toward the end of 2020. Throughout 2021, net income fluctuated, reaching highs around mid-year and declining again in the final quarter. In 2022, the trend was similar, with increases in the middle quarters and decreases in the fourth quarter. Notably, there was a substantial increase in mid-2023, achieving a peak of 793,700 thousand USD in June 2023, followed by a decline at the end of that year. In 2024, the data shows another increase, with net income peaking at 889,900 thousand USD in June, before declining in the subsequent quarters. In early 2025, net income levels off around the 500,000 thousand USD mark.

Net Sales

Net sales demonstrate an overall upward trend from March 2020 through mid-2023, despite some fluctuations. Sales increased from 4,146,700 thousand USD in March 2020 to a high of 6,240,600 thousand USD in June 2023. Periodic decreases are seen, such as the drop in the last quarter of 2021 and in some quarters of 2023 and 2024, but the overall trajectory is increasing. The data for early 2025 suggests stabilization around 5,300,000 thousand USD. Mid-year periods tend to record higher sales figures compared to the year-end quarters, indicating possible seasonal effects or cyclical demand patterns.

Net Profit Margin

The net profit margin shows a consistent and gradual increase over the periods where data is available, beginning around 11.06% in the first available quarter of 2020 and rising steadily to 11.63% by March 2025. While minor fluctuations occur, the overall pattern is one of margin improvement. This suggests enhanced profitability or operational efficiency despite fluctuations in net income and net sales. The margin maintains a relatively narrow band from about 8.45% to slightly above 11%, with clear improvement noted from 2022 onward, stabilizing near or above 10% in later quarters.

Overall Analysis

The financial data indicates a company experiencing cyclical variations in net income, with peaks generally occurring in mid-year quarters and troughs toward year-ends. Net sales follow a similar pattern but reveal a long-term upward trend pointing to growth in revenue generation capacity. The steady improvement in net profit margin highlights effective cost management or pricing strategies that help maintain profitability amid sales fluctuations. The combination of rising sales and improving margins suggests an increasingly efficient operation potentially capitalizing on market conditions from 2022 onward. However, volatility in net income warrants consideration of external factors impacting earnings, such as market demand shifts, input costs, or other operational challenges.

The financial data reveals notable fluctuations in net income over the observed periods. Net income exhibited significant growth from March 2020 through September 2020, peaking at 705.8 million US dollars. However, a decline occurred in the subsequent quarter ending December 2020, dipping to 407.0 million. This downward trend persisted into early 2021, followed by another increase during mid-2021. This cyclical pattern of rise and fall continued through the years, with the highest net income recorded in mid-2024 at approximately 889.9 million, showing overall growth despite intermittent quarterly declines.

Shareholders’ equity displayed a general downward trend from March 2020, starting at roughly 3.29 billion, and falling steadily to a low of about 2.22 billion in June 2022. Post this period, equity began a recovery phase, increasing through 2023 and into 2024, reaching a peak of approximately 4.16 billion in late 2024 before a slight decline towards March 2025. This trajectory suggests periods of contraction followed by robust recovery in equity base.

Return on equity (ROE) values are available from late 2020 onwards and demonstrate relatively high performance throughout. The ROE peaked at 81.71% in mid-2022, indicative of strong profitability relative to shareholder equity during that quarter. ROE figures generally hovered within the 60-80% range in subsequent periods, indicating consistent effectiveness in generating profit from equity. The data shows some modest volatility, but overall maintains a high return level across the quarters.

In summary, the company experienced variable profitability with noteworthy spikes in net income and ROE, alongside fluctuating shareholders’ equity that showed an initial decline followed by recovery. These patterns suggest responsiveness to market or operational conditions, resulting in cyclical performance in income and equity composition, while maintaining strong returns on equity throughout the period analyzed.

The financial data reveals several noteworthy patterns and trends over the observed periods.

Net Income Trends

Net income exhibits a fluctuating but overall volatile trend across the quarters. Initial figures show strong growth reaching a peak in the September 2020 quarter, followed by a significant decline in December 2020. From March 2021 to December 2021, earnings again show variability with a modest decline towards the end of the year. It then accelerates markedly through 2022 and peaks in the third quarter of 2023. However, a notable decrease follows in December 2023, before net income rebounds sharply through 2024, reaching a high in the third quarter and then showing a slight decrease again by March 2025. This indicates cyclicality and some degree of volatility in profitability across the quarters.

Total Assets Development

Total assets have generally increased over the entire period, starting from around $20.6 billion in March 2020 and rising steadily to approximately $24.6 billion by March 2025. This growth is gradual and consistent, with no significant drops. The steady asset increase may suggest ongoing investments, acquisitions, or organic growth in the company's asset base.

Return on Assets (ROA) Insights

ROA began to be reported from March 2021, showing values fluctuating mostly between approximately 7.96% and 11.35%. The ROA experienced a slight downward movement between the first half of 2022 but then showed a sustained upward trend starting from late 2022 through mid-2024, peaking at 11.35% in September 2024 before a modest decline towards the end of 2024 and the start of 2025. This suggests improved profitability efficiency relative to asset base in recent periods, despite some short-term variability.

Overall Interpretations

The combination of rising total assets and cyclical net income suggests the company is expanding its asset base while encountering fluctuations in earnings likely tied to market conditions, operational performance, or external factors. The generally increasing ROA in the latter periods implies enhanced utilization of assets for generating profits. Nevertheless, the volatility in net income emphasizes the need for monitoring earnings quality and stability over time.