Is Sherwin-Williams A Good Long-Term Stock?

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Sherwin-Williams (SHW) stock lost 3.6% over the past year, dividends included, while the S&P 500 returned 14.0%. For a long-term holder, the case for the stock depends on whether the paint maker can keep shrinking its share count. Over three years, the company has cut that count by 6.0%, leaving each remaining share with a larger slice of the business. So how much has the smaller share count added for each shareholder?

Sherwin-Williams’ Per-Share Earnings Grew Faster Than Net Income

Sherwin-Williams grew its earnings per share by 5.2% a year over the three years to September 30, 2026, while net income grew 3.4% annually. The smaller share count pushed per-share growth above net income growth.  The yearly gap of 1.8 points is a little smaller than the 6.0% cut in the count alone would give. Each share now earns more of the profit.

How Sherwin-Williams Pays For Its Buyback

Sherwin-Williams funds most of its buyback using cash generated by the paint business. The Paint Stores Group, its largest segment, recorded $13.6 billion of revenue in fiscal 2025. Over the last twelve months, the company produced $3.68 billion of cash from operations, and capital spending took only 16.4% of it.

Suppliers also help. Sherwin-Williams owed them $2.9 billion at September 30, 2026, exceeding the $2.55 billion it held in inventory. In effect, suppliers fund the company’s inventory.

Even so, free cash flow of $3.08 billion fell short of the $3.26 billion the company returned through buybacks and dividends over the last twelve months. Borrowing appears to have covered the difference, as total debt rose to $14.0 billion from $13.6 billion a year earlier.

Can Sherwin-Williams Keep Shrinking Its Share Count?

Sherwin-Williams can continue buying back shares while its cash grows, though its debt already stands high against earnings. Free cash flow rose to $3.08 billion in the latest twelve months from $2.43 billion a year before. Net debt of $13.7 billion was 2.9 times EBITDA, earnings before interest, taxes, depreciation and amortization, over the last twelve months. Still, operating profit covered the interest bill 7.5 times over. On the October 27 call, management called the balance sheet strong and put net debt at 2.4 times its own adjusted EBITDA.

The worry for holders sits in management’s outlook. The company expects demand in 2027 to stay “softer for longer,” with raw material costs rising by a low to mid-single-digit percentage. Management also trimmed its fiscal 2026 forecast for reported earnings per share to $11.07 at the midpoint, from $11.12 in July. The forecast for adjusted earnings per share kept its $12 midpoint. Management did say the company has grown sales volume in every quarter of 2026 so far.

Over three years, the buyback has made each Sherwin-Williams share’s earnings grow faster than net income, and the business still pays for most of it from its own cash. The buyback would stall if free cash flow fell further behind what the company hands back, since the company would have to add any shortfall to its debt, which already rose over the twelve months to September 2026. Free cash flow against buybacks plus dividends is the measure to watch when Sherwin-Williams reports in January 2027.

Sitting On A Big Gain In Sherwin-Williams?

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