Head-To-Head Contrast: Sherwin-Williams (SHW) versus PPG Industries (PPG)

Sherwin-Williams (NYSE: SHW) and PPG Industries (NYSE:PPG) are both large-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.

Risk and Volatility

Sherwin-Williams has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, PPG Industries has a beta of 1.54, meaning that its stock price is 54% more volatile than the S&P 500.

Dividends

Sherwin-Williams pays an annual dividend of $3.40 per share and has a dividend yield of 1.0%. PPG Industries pays an annual dividend of $1.80 per share and has a dividend yield of 1.8%. Sherwin-Williams pays out 28.1% of its earnings in the form of a dividend. PPG Industries pays out 46.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sherwin-Williams has increased its dividend for 38 consecutive years and PPG Industries has increased its dividend for 44 consecutive years. PPG Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

72.9% of Sherwin-Williams shares are owned by institutional investors. Comparatively, 71.8% of PPG Industries shares are owned by institutional investors. 1.7% of Sherwin-Williams shares are owned by company insiders. Comparatively, 0.7% of PPG Industries 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.

Profitability

This table compares Sherwin-Williams and PPG Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sherwin-Williams 9.65% 64.92% 10.44%
PPG Industries 6.79% 29.47% 9.49%

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sherwin-Williams 1 5 12 0 2.61
PPG Industries 0 9 6 0 2.40

Sherwin-Williams currently has a consensus target price of $362.46, suggesting a potential upside of 9.21%. PPG Industries has a consensus target price of $114.50, suggesting a potential upside of 13.67%. Given PPG Industries’ higher probable upside, analysts clearly believe PPG Industries is more favorable than Sherwin-Williams.

Earnings and Valuation

This table compares Sherwin-Williams and PPG Industries’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sherwin-Williams $12.56 billion 2.45 $2.11 billion $12.12 27.38
PPG Industries $14.85 billion 1.74 $2.56 billion $3.84 26.23

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

Summary

Sherwin-Williams beats PPG Industries on 11 of the 17 factors compared between the two stocks.

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.

About PPG Industries

PPG Industries, Inc. manufactures and distributes a range of coatings and specialty materials. The Company has three segments: Performance Coatings, Industrial Coatings and Glass. The Performance Coatings segment includes the refinish, aerospace, protective and marine, architectural businesses. The Industrial Coatings segment includes the automotive original equipment manufacturer (OEM), industrial coatings, packaging coatings, coatings services and specialty coatings and materials businesses. The Glass segment includes the North American fiber glass business. The Company’s geographical segments include the United States, Canada, Western Europe, Latin America, Central and Eastern Europe, the Middle East, Africa and Asia Pacific. The Company’s brands include PPG, GLIDDEN, COMEX, OLYMPIC, DULUX, SIKKENS, PPG PITTSBURGH PAINTS, MULCO, FLOOD, LIQUID NAILS, SICO, CIL, RENNER, TAUBMANS, WHITE KNIGHT, BRISTOL, HOMAX, DEKORAL, TRILAK, GORI, and BONDEX, among others.

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