Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Sherwin-Williams Company's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.2% to 4.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 41, DPO 71, DIO 69). At a 8.0% WACC with mid-year discounting, the terminal value (77% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 11.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $170.22 per share, suggesting SHW is overvalued by 46.8% at the current price of $319.73.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 3,247 | 3,393 | 3,568 | 3,725 | 3,884 | 3,981 |
| (−) Net Interest | 456 | 477 | 501 | 523 | 546 | 559 |
| (+) D&A | 755 | 844 | 886 | 888 | 861 | 883 |
| EBITDA | 4,458 | 4,714 | 4,955 | 5,136 | 5,291 | 5,424 |
| (−) Tax | 696 | 727 | 765 | 798 | 832 | — |
| (−) CapEx | 818 | 855 | 899 | 938 | 978 | — |
| (−) ΔWC | -68 | 121 | 145 | 130 | 132 | — |
| Free Cash Flow (FCF) | 3,012 | 3,011 | 3,147 | 3,270 | 3,349 | — |
| Peers' EBITDA Multiple | 11.8x | |||||
| Terminal Value | 64,054 | |||||
| WACC / Discount Rate | 7.98% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,899 | 2,684 | 2,598 | 2,500 | 2,371 | 43,644 |
| Enterprise Value | 56,695 | |||||
| Projection Period | 13,051 | 23.0% | ||||
| Terminal Value | 43,644 | 77.0% | ||||
| (−) Current Net Debt | 14,327 | |||||
| Equity Value | 42,368 | |||||
| (÷) Outstanding Shares | 249M | |||||
| Fair Price | $170 | -46.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 7.8x | 9.8x | 11.8x | 13.8x | 15.8x |
|---|---|---|---|---|---|
| 6.0% | $125 | $157 | $190 | $222 | $255 |
| 7.0% | $118 | $149 | $180 | $211 | $242 |
| 8.0% | $111 | $141 | $170 | $200 | $230 |
| 9.0% | $104 | $133 | $161 | $190 | $218 |
| 10.0% | $98 | $125 | $153 | $180 | $207 |
Current price: $319.73. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.