Today we are breaking down the paint giant Sherwin-Williams. Founded in 1866, Sherwin Williams is a great example of a company where everyday consumers might not appreciate just how great of a business and stock this has been.
Over the last 20 years, Sherwin has compounded earnings at 14% per year. And over those 20 years, the stock has returned 26x your investment. And that's compared to the S&P at 5x your investment. This has been an incredible quiet compounder.
My guest today is Todd Basnight, director of equity research at Aureus Asset Management. We discuss the business’s vertically integrated model, the focus on a particular customer base, a management team that's been thoughtful about capital allocation, and some of its big deals historically. Please enjoy this Breakdown on Sherwin-Williams.
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Show Notes
(00:00:00) Welcome to Business Breakdowns
(00:04:36) Sherwin Williams' Business Model and History
(00:08:46) The Paint Stores Group: Sherwin Williams' Crown Jewel
(00:14:37) Professional Painters vs. DIY: Market Dynamics
(00:19:43) Sherwin Williams' Controlled Distribution Model
(00:28:24) The Valspar Acquisition and Consumer Brands
(00:32:52) Exploring the Industrial Coatings Market
(00:36:43) Sherwin's Performance in the Automotive Market
(00:38:03) Sherwin's Growth and Market Share
(00:39:32) Financial Overview and Store Economics
(00:41:17) Sherwin's Competitive Edge and Market Dynamics
(00:50:59) Capital Intensity and Free Cash Flow
(01:00:00) Risks and Management Changes
(01:04:24) Lessons from Sherwin-Williams
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