CAPM,WACC,DCF & Multiples

Weighted Average Cost of Capital(1/2)

Cost Of Equity (CAPM)Beta 0.67 Google Finance

Risk Free Rate 3.45% Yield Rates US Treasury Bond 10-Years

Market Return 7.66% Yearly Average 1966-2010Market Premium 4.04%

Cost of Equity 6.27%

Cost of DebtType Due date Rate Amount (in thousands)

Senior Notes 2014 2.170% 517,269

Debentures 2027 0.0588 148,923.7

Debentures 2097 7.45% 139,473

Primary Notes 2015 0.0732 14,370

St Borrowings 8.80% 22,674

Total Debt

842,709.9

Cost Of Debt 3.97%

Cost Of CapitalShares Outstanding 109,436,869

Market Price 81.12

Value of Equity ($K) 8,877,518.81

Value of Debt($K) 842,709.90

Enterprise Value($K) 9,720,228.708

Taxes 32%

Weighted Average Cost of Capital(2/2)

Weighted Average Cost Of Capital 5.96%

Discounted Cash Flow Analysis

Discounted Cash Flow Analysis(in Thousands)

2010 2011 2012 2013 2014Operating Cash 418,983 742,989 690,041 697,647 732,435

Capital Expenditure(-) -125,170 -112,288 -117,485 -122,922 -128,612

Dividend (-) -157,589 -170,183 -187,276 -195,371 -203,790

Future Cash Flow 136,224 460,518 385,279 379,354 400,034

Projection Year 1 2 3 4 5

Discount Factor@5.96% 0.944 0.891 0.841 0.793 0.749

PV of Free Cash Flow 128,561.7 410,168.9 323,854.2 300,937.9 299,493.3

Terminal Value AssumptionsTerminal Cash Flow 400,034

Terminal Growth Rate 2.40%Terminal Value 11,506,596

Projection Year 5Discount Factor@5.96% 0.749

PV of Terminal Value 8,614,639.6

Implied Equity Value & Share PricePV of Free Cash Flow 1,463,016.0

PV of Terminal Value 8,614,639.6

Enterprise Value 10,077,655Outstanding Shares 109,436,869

Net Debt 842,709.900

Implied Equity Value 9,234,945.7Implied Share Value 84.39

Valuation using MultiplesMultiples of Competitors

PPG Industries Nippon Paints Valspar Corporation

Trailing P/E Ratio 18.88 18.12 17.34Price/Sales 1.03 0.73 1.07Price/Book 3.79 1.27 2.31EV/EBITDA 8.79 15.48 9.85

Valuation of Sherwin Williams

PPG Industries Nippon Paints Valspar Corporation

Trailing P/E Ratio 8731.62 8379.38 8019.40Price/Sales 8013.40 5681.82 8324.60Price/Book 6101.85 2044.68 3719.07EV/EBITDA 7991.25 14073.33 8954.93

Market Leader