Sherwin-Williams Extends Losses. What’s Ailing the Paint Maker.

Sherwin-Williams cited the impact of tariffs on certain pigments, packaging, and its coil coatings on its second-quarter earnings call. (Jonathan Weiss/Dreamstime.com)

Key Points

• Sherwin-Williams shares fell for ten consecutive sessions, closing down 0.8% at $340.10, marking its longest losing streak since 1999.
• The company faces ongoing softness in the DIY market and macroeconomic uncertainty, impacting sales despite professional customer growth.
• Sherwin-Williams is trading at nearly 28 times next year’s earnings, higher than the S&P 500’s 22.79, raising valuation concerns.

Shares of paint maker Sherwin-Williams notched their 10th straight session of losses on Thursday.

Shares closed down 0.8% at $340.10. The stock has fallen 7.8% over this 10-day stretch, marking its longest losing streak since Jan. 25, 1999, when it fell for 13 consecutive sessions.

The company has grappled with ongoing softness in the DIY space, which caters to homeowners looking to do their own renovations. Macroeconomic uncertainty could be one factor—larger projects are often financed. Retailers like Home Depot have observed similar trends.

The latest earnings report, released at the end of July, revealed weakness in the company’s do-it-yourself segment, even as sales increased across certain professional customer end markets. Despite that disappointment, Sherwin’s losses have only started to intensify more recently.

Considering the previous quarter’s report, it looks like the company is bracing for impact. While Sherwin could benefit from a turnaround in the housing market, recovery seems to be months away.

The company has taken steps to save cash and possibly avoid layoffs. Last week, Sherwin said it would temporarily suspend its 401(k) match beginning Oct. 1, citing poor sales as well as tariff-related headwinds.

Jefferies analyst Chris Counihan posited earlier this month that demand would likely remain soft.

“Fixed cost absorption and weaker demand trends are weighing on company operating performance,” Counihan wrote on Sept. 10, noting that Sherwin was focusing on investing in market share while peers raised prices and cut jobs.

With regard to President Donald Trump’s levies, Counihan noted that prices in resins, acrylics and other petrochemicals were easing, “which is helping offset the inflationary pressure from tariffs.” This is expected to flow through to pricing this winter, the analyst added, saying he didn’t expect Sherwin to raise prices following competitors’ price hikes in July.

The stock’s valuation could be a factor in its latest selloff as well. Sherwin was trading at nearly 28 times next year’s earnings, above 22.79 for the benchmark S&P 500, as of Wednesday. While that’s not as bad as the hyperinflated valuation of some other companies—think Palantir —it is still more expensive than the broader market, and performance lately hasn’t been up to snuff.

When Citi Research analysts met with members of the management team at the end of August, the company “emphasized a ‘softer and weaker for longer’ demand environment several times.”

Still, analysts came away from that meeting largely upbeat. Analyst Patrick Cunningham argued on Aug. 22 that the company had the potential to come out on top in a “fluid” competitive landscape, even as worries about home affordability and consumer confidence persist.

Firms tracked by FactSet are nearly split between buying the stock and staying on the sidelines. Of 18 firms, 15 rate Sherwin at Buy, while 12 rate it at Hold. One analyst, Spencer Liberman with Morningstar Equity Research, rates it at Sell.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

Corrections & Amplifications: Sherwin-Williams stock notched its 10th straight session of losses on Thursday. An earlier version of this article incorrectly stated that it was the 11th straight session.