Let’s talk about the popular The Sherwin-Williams Company (NYSE:SHW). The company’s shares saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on SHW’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for Sherwin-Williams

What’s the opportunity in SHW?

The stock is currently trading at $395.77 on the share market, which means it is overvalued by 76% compared to my intrinsic value of $225.24. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since SHW’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much SHW moves relative to the rest of the market.

What does the future of SHW look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. SHW’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in SHW’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe SHW should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on SHW for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for SHW, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.