The Magic Formula for Sherwin-Williams




A cheap business and a profitable company


So how do Sherwin-Williams (NYS: SHW) and a few peers fare?


Enterprise Value


Earnings Yield


Valspar (NYS: VAL) $3,927$39710.1%6.6%
Masco (NYS: MAS) $6,006$1422.4%1.0%
Newell Rubbermaid (NYS: NWL) $6,194$70011.3%6.5%


Going by the Magic Formula criteria, none of these companies meets both standards. Valspar and Newell Rubbermaid offer earnings yields higher than the Formula's desired 10%, but their ROAs are less than one-third the formula's desired 25%. Sherwin-Williams has the highest ROA at 9.2%, which is still less than half of the formula's desired 25%, and its earnings yield is 1.6 percentage points away from the desired 10%. Sure, these companies didn't meet the high bars for the Magic Formula screen, but that certainly doesn't mean they can't be profitable investments. High-quality companies are rarely on sale, so they often won't make the Magic Formula cut. 

Foolish bottom line


Interested in Sherwin-Williams? Add it to My Watchlist, our free, personalized stock tracking service.



Read Full Story