Sherwin Williams Co.
: equity valuation

  • Hélio Ricardo Rodrigues Gonçalves (Student)

Student thesis: Master's Thesis

Abstract

The purpose of this dissertation is the valuation of SHW’s equity as of 31-12-2021. The application of the Discounted Cash Flow (DCF) model indicated a fair market value of $276 per share, while the share was trading at $307 on 03-09-2021. A relative valuation was conducted, based on multiples EV/EBITDA and EV/Sales, which also suggested that the market was overestimating the value of SHW’s share. Nevertheless, the relative valuation alone (i.e. without the support of a DCF valuation) could not be used as the basis for a “sell” recommendation, because the identified peers are substantially different from SHW in terms of ROIC, growth rate and product mix. As a matter of fact, it was not possible to identify perfectly comparable peers for SHW. For the same date (31-12-2021), JP Morgen defined a price target of $310 per share. The analysis of JP Morgan’s valuation report led to the identification of three major differences when compared to the valuation included in this dissertation. Such differences consist of different projected cash flows, different discount rate and/or perpetual growth rate, and different treatment of debt.
Date of Award24 Jan 2022
Original languagePortuguese
Awarding Institution
  • Universidade Católica Portuguesa
SupervisorMário Meira (Supervisor)

Keywords

  • Equity valuation
  • Discounted cash flows
  • Paints and coatings

Designation

  • Mestrado em Gestão Aplicada

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