Today we're going to take a look at the well-established The Sherwin-Williams Company (NYSE:SHW). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$281 at one point, and dropping to the lows of US$238. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Sherwin-Williams' current trading price of US$239 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Sherwin-Williams's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Sherwin-Williams

What's The Opportunity In Sherwin-Williams?

According to my valuation model, the stock is currently overvalued by about 35%, trading at US$239 compared to my intrinsic value of $176.15. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Sherwin-Williams's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Sherwin-Williams generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. With profit expected to grow by 20% over the next couple of years, the future seems bright for Sherwin-Williams. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? SHW's optimistic future growth appears to have been factored into the current share price, 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 tabs on SHW for some time, 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 optimistic prospect is encouraging for SHW, which means it's worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. While conducting our analysis, we found that Sherwin-Williams has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Sherwin-Williams, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.