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

Earnings & Valuation

This table compares Axalta Coating Systems and Sherwin-Williams’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Axalta Coating Systems $4.07 billion 1.88 $41.80 million $0.29 108.62
Sherwin-Williams $11.86 billion 3.16 $1.13 billion $11.80 33.92

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.

Insider & Institutional Ownership

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

Analyst Ratings

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

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

Axalta Coating Systems currently has a consensus target price of $33.50, suggesting a potential upside of 6.35%. Sherwin-Williams has a consensus target price of $412.33, suggesting a potential upside of 3.02%. Given Axalta Coating Systems’ higher probable upside, equities analysts clearly believe Axalta Coating Systems is more favorable than Sherwin-Williams.

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 28.8% of its earnings in the form of a dividend. Sherwin-Williams has increased its dividend for 38 consecutive years.

Profitability

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

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

Risk and Volatility

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

Summary

Sherwin-Williams beats Axalta Coating Systems on 12 of the 17 factors compared between the two stocks.

About Axalta Coating Systems

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).

About Sherwin-Williams

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.

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