Sherwin-Williams (NYSE: SHW) and Axalta Coating Systems (NYSE:AXTA) are both mid-cap construction companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, earnings, risk, profitability, institutional ownership, dividends and valuation.

Volatility and Risk

Sherwin-Williams has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500. Comparatively, Axalta Coating Systems has a beta of 1.55, indicating that its stock price is 55% more volatile than the S&P 500.

Insider and Institutional Ownership

76.0% of Sherwin-Williams shares are held by institutional investors. Comparatively, 99.3% of Axalta Coating Systems shares are held by institutional investors. 1.7% of Sherwin-Williams shares are held by insiders. Comparatively, 2.3% of Axalta Coating Systems shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Sherwin-Williams and Axalta Coating Systems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sherwin-Williams 0 5 12 0 2.71
Axalta Coating Systems 1 6 8 0 2.47

Sherwin-Williams currently has a consensus target price of $410.20, indicating a potential upside of 1.15%. Axalta Coating Systems has a consensus target price of $33.50, indicating a potential upside of 2.13%. Given Axalta Coating Systems’ higher possible upside, analysts plainly believe Axalta Coating Systems is more favorable than Sherwin-Williams.

Valuation and Earnings

This table compares Sherwin-Williams and Axalta Coating Systems’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sherwin-Williams $11.86 billion 3.20 $1.13 billion $11.37 35.67
Axalta Coating Systems $4.07 billion 1.96 $41.80 million $0.24 136.67

Sherwin-Williams has higher revenue and earnings than Axalta Coating Systems. Sherwin-Williams is trading at a lower price-to-earnings ratio than Axalta Coating Systems, indicating that it is currently the more affordable of the two stocks.

Dividends

Sherwin-Williams pays an annual dividend of $3.40 per share and has a dividend yield of 0.8%. Axalta Coating Systems does not pay a dividend. Sherwin-Williams pays out 29.9% of its earnings in the form of a dividend. Axalta Coating Systems has raised its dividend for 38 consecutive years.

Profitability

This table compares Sherwin-Williams and Axalta Coating Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sherwin-Williams 7.82% 58.02% 9.53%
Axalta Coating Systems 1.46% 19.91% 4.30%

Summary

Sherwin-Williams beats Axalta Coating Systems on 11 of the 17 factors compared between the two stocks.

Sherwin-Williams Company Profile

The Sherwin-Williams Company (Sherwin-Williams) is engaged in the development, manufacture, distribution and sale of paint, coatings and related products. The Company’s segments are Paint Stores Group, Consumer Group, Global Finishes Group, Latin America Coatings Group and Administrative. The Paint Stores Group markets and sells Sherwin-Williams branded architectural paint and coatings, protective and marine products, original equipment manufacturer (OEM) product finishes and related items. The Consumer Group segment manufactures and distributes a range of paint, coatings and related products. The Global Finishes Group develops, licenses and manufactures a range of protective and marine products, automotive finishes and refinish products, OEM product finishes and related products. The Latin America Coatings Group develops, licenses, manufactures and distributes a range of architectural paint and coatings, protective and marine products, OEM product finishes and related products.

Axalta Coating Systems Company Profile

Axalta Coating Systems Ltd. is a holding company. The Company is a manufacturer, marketer and distributor of coatings systems primarily serving the transportation industry. The Company’s segments include Performance Coatings and Transportation Coatings. Through its Performance Coatings segment, the Company provides liquid and powder coatings solutions to a fragmented and local customer base. Through its Transportation Coatings segment, the Company provides coating technologies to original equipment manufacturers (OEMs) of light and commercial vehicles. The Performance Coatings segment serves various end markets, including refinish and industrial. The Company develops, markets and supplies a portfolio of coatings systems and color matching technologies. The Company also develops and supplies an array of coatings systems for a range of commercial applications, including heavy-duty truck (HDT), bus, rail and agricultural construction equipment (ACE).

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