Sherwin-Williams' CEO Says Its "Magic Number" Is Coming. Are Shares a Buy?

The last time this happened, shares roared 80% in a year.In 1991, the paint-making company Sherwin-Williams (SHW +1.12%) was celebrating more than its 125th birthday. That year, profits climbed to $63 million on sales of $1.37 billion, securing Sherwin-Williams' place as one of the very few companies to dominate its industry for a century. Since then, profits have risen to $3.34 billion across all segments, a 5,200% rise. Capital appreciation naturally followed; since 1991, shares have returned 13,470%. Over the last few decades, Sherwin-Williams has been one of the very best stocks on Wall Street to own. Yet its recent returns have been disappointing, with shares almost exactly flat over the last 12 months even as the S&P 500 returned 14%. The lag comes amid what CEO Heidi Petz acknowledged as a "very challenging environment" that she expected would persist at least throughout the first half of 2026. ExpandNYSE: SHWSherwin-WilliamsToday's Change(1.12%) $4.05Current Price$364.65Key Data PointsMarket Cap$90BDay's Range$359.82 - $365.9652wk Range$308.84 - $379.65Volume10Avg Vol1.8MGross Margin48.85%Dividend Yield0.87% This was six months ago, however. In the same earnings call, Petz also pointed to a "magic number" approaching that could bring back the company's momentum. Sure enough, shares have rallied 12% in 2026 so far, possibly in anticipation of this. While many companies cheer falling interest rates, there's one related number that Sherwin-Williams and every construction-involved company is more interested in: the 30-year fixed mortgage rate. A 30-year fixed mortgage rate below 6% is a game-changer for Sherwin-Williams Since the Federal Reserve began ramping up interest rates in mid-2022 to combat inflation, the 30-year fixed mortgage rate, or the most common mortgage loan option for U.S. homeowners, has risen from a pandemic-era low of 2.67% in December 2020 to as high as 7.79% in October 2023. Image source: Getty Images. This was the highest level seen since late 2000, and caused housing construction to fall despite a supply shortage, as potential new homeowners balked at the much higher monthly payments. This slowdown is a big deal for Sherwin-Williams since its North American architectural paint segment, known as Sherwin's Paint Stores Group, is its biggest and most profitable segment, accounting for nearly two-thirds of profits in 2023. But as you can see below, the 30-year fixed mortgage rate has tumbled in recent months, and is tantalizingly close to the 6% level that Petz called the magic number for unleashing pent-up construction demand. Image source: Freddie Mac via FRED®. The fall comes amid three interest rate cuts from the Federal Reserve in 2025, with more expected by April or June. In May, President Donald Trump's nominee to chair the central bank, Kevin Warsh, is expected to be sworn in, and the likely new Fed Chair has signaled he will advocate for more cut rates. Traders are forecasting a 74% likelihood that the Fed cuts rates in June, possibly by a dramatic 75 basis points, which brings rates to the 2.75% to 3% range. Of course, Wall Street knows this better than anyone, so Sherwin-Williams has already rallied 12% year to date amid these expectations. Given that, are shares a buy? An 80% gain from a catalyst everyone saw coming Falling rates will surprise no one, but then again, the Federal Reserve doesn't like to surprise markets. The last time it issued a rate cut unexpectedly was in March 2020, a special circumstance given the arrival of a once-in-a-century pandemic. But while it clearly telegraphs its rate cuts in advance, Sherwin-Williams doesn't need this catalyst to be a surprise. Consider its 80% surge from April 1, 2020, to April 1, 2021, when it benefited from low rates that the Federal Reserve had begun implementing weeks before. Data by YCharts. Granted, rates won't fall that low anytime soon, but this shows that shares can rise from rate cuts that everyone knows are coming. What if, for some reason, the Fed surprises in June and doesn't lower rates? Shares would likely fall, as traders price in the "challenging environment" stretching on at least a few months longer. That said, Sherwin-Williams has delivered some surprises of its own lately, with sales growth beating analysts' expectations in each of the last four quarters. The company recently raised its dividend for the 47th year running, issuing a hearty 10.5% increase that puts the company on the cusp of Dividend King status, a milestone very few companies achieve. This all signals a resilient company whose days of underperformance are numbered. 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