Here's Why Sherwin-Williams (NYSE:SHW) Can Manage Its Debt Responsibly
Here's Why Sherwin-Williams (NYSE:SHW) Can Manage Its Debt Responsibly
Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies The Sherwin-Williams Company (NYSE:SHW) makes use of debt. But the real question is whether this debt is making the company risky.
传说中的基金经理李录(得到了查理·芒格的支持)曾经说过:“最大的投资风险不是价格的波动性,而是你是否会遭受资本的永久损失。”当你考虑一个公司的资产负债表时,考虑到债务的存在很自然,因为当一个企业破产时往往涉及到债务。正如许多其他公司一样,Sherwin-Williams公司(纽交所代码:SHW)借入了债务。真正的问题是这些债务是否使公司承担风险.
What Risk Does Debt Bring?
债务带来了什么风险?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
债务可以帮助企业,直到企业发生困难并无法以新资本或自由现金流偿还债务时为止。如果公司无法履行偿还债务的法律义务,股东可能什至一无所有。然而,一种更经常(但仍然代价高昂)的情况是,公司不得不以低于市场价格发行股票,永久稀释股东,以加强其资产负债表。然而,通过取代稀释,债务可以成为需要资本以高回报率投资增长的企业的一种极好的工具。在考虑企业使用多少债务时,首先要做的是查看其现金和债务的总体情况。
What Is Sherwin-Williams's Net Debt?
Sherwin-Williams的净债务是多少?
The chart below, which you can click on for greater detail, shows that Sherwin-Williams had US$10.3b in debt in June 2024; about the same as the year before. And it doesn't have much cash, so its net debt is about the same.
下图是详细信息,请点击查看:Sherwin-Williams在2024年6月有10.3亿美元的债务,与去年大致相同。且现金不多,所以其净债务也差不多。
![big](https://newsfile.futunn.com/public/NN-PersistNewsContentImage/7781/20240909/0-9e210f2b10814c322429a14c09795009-0-01bca8dcef907a286a3165c11d86b084.png/big)
How Strong Is Sherwin-Williams' Balance Sheet?
宣伟公司的资产负债表有多强?
We can see from the most recent balance sheet that Sherwin-Williams had liabilities of US$7.47b falling due within a year, and liabilities of US$12.5b due beyond that. Offsetting these obligations, it had cash of US$200.0m as well as receivables valued at US$3.11b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$16.7b.
我们可以从最近的资产负债表看到,宣伟公司短期负债为74.7亿美元,长期负债为125亿美元。 抵消这些债务,它持有2亿美元的现金以及价值31.1亿美元的应收账款,其中12个月内到期。 因此,其负债超过了其现金和(短期)应收账款的总和167亿美元。
Of course, Sherwin-Williams has a titanic market capitalization of US$91.0b, so these liabilities are probably manageable. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward.
当然,宣伟公司的市值高达910亿美元,因此这些负债可能是可以管理的。 但是有足够的负债,我们肯定会建议股东继续关注资产负债表的情况。
We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it.
Service Corporation International的债务是其EBITDA的3.5倍,而其EBIT可覆盖其利息开支的3.7倍。综合考虑,虽然我们不希望看到债务水平上升,但我们认为它可以应对当前的杠杆。好消息是,Service Corporation International在过去12个月中将其EBIT提高了2.9%,从而逐渐降低了其相对于收益的债务水平。毫无疑问,我们从资产负债表中获得了有关债务的大部分内容。但是,相对于资产负债表,更重要的是未来收益,这将决定Service Corporation International维持健康资产负债表的能力。如果您关注未来,您可以查看此免费报告,其中有分析师的利润预测。
Sherwin-Williams's net debt of 2.3 times EBITDA suggests graceful use of debt. And the alluring interest cover (EBIT of 9.7 times interest expense) certainly does not do anything to dispel this impression. One way Sherwin-Williams could vanquish its debt would be if it stops borrowing more but continues to grow EBIT at around 10%, as it did over the last year. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Sherwin-Williams can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
宣伟公司的净债务为EBITDA的2.3倍,表明其债务的使用合理。 令人向往的利息盈利覆盖率(EBIT为利息费用的9.7倍)确实并未消除这种印象。 宣伟公司可以战胜债务的一种方式是停止借更多款项,而继续让EBIT以约10%的速度增长,就像去年一样。 从资产负债表中,我们确实能学到最多关于债务。 但最终,业务的未来盈利能力将决定宣伟公司是否能够随时间加强其资产负债表。 因此,如果您想了解专业人士的看法,您可能会发现分析师盈利预测的免费报告很有趣。
Finally, a company can only pay off debt with cold hard cash, not accounting profits. So it's worth checking how much of that EBIT is backed by free cash flow. Over the most recent three years, Sherwin-Williams recorded free cash flow worth 55% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.
最后,一家公司只能用冷硬现金而不是会计利润偿还债务。 因此,值得查看EBIT中有多少是由自由现金流支持的。 在最近的三年中,宣伟公司录得的自由现金流价值为其EBIT的55%,这是相当正常的,因为自由现金流不包括利息和税金。 这笔冷硬现金意味着宣伟公司可以在需要时减少其债务。
Our View
我们的观点
Sherwin-Williams's interest cover suggests it can handle its debt as easily as Cristiano Ronaldo could score a goal against an under 14's goalkeeper. And we also thought its EBIT growth rate was a positive. All these things considered, it appears that Sherwin-Williams can comfortably handle its current debt levels. On the plus side, this leverage can boost shareholder returns, but the potential downside is more risk of loss, so it's worth monitoring the balance sheet. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 1 warning sign for Sherwin-Williams you should know about.
宣伟公司的利息覆盖表明它可以像克里斯蒂亚诺·罗纳尔多在14岁以下守门员面前进球一样轻松地处理其债务。我们还认为它的EBIt增长率是一个积极的因素。考虑到这些因素,宣伟公司似乎可以轻松地处理其当前的债务水平。从积极的一面来看,这种杠杆可以提高股东的回报,但潜在的下降风险更大,因此值得监控资产负债表。毫无疑问,我们从资产负债表中了解到的债务最多。然而,并不是所有的投资风险都存在于资产负债表内——远非如此。这些风险很难发现。每个公司都有这些风险,我们已经发现了宣伟公司的1个警告信号,您应该知道。
If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.
如果在所有这些之后,您更感兴趣的是具有坚实资产负债表的快速增长公司,那么不要拖延,查看我们的净现金增长股票列表。
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