Financial Analysis: Sherwin-Williams Company (The) (SHW) & Axalta Coating Systems (AXTA)

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

Insider and Institutional Ownership

72.6% of Sherwin-Williams Company (The) shares are owned by institutional investors. 1.7% of Sherwin-Williams Company (The) shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sherwin-Williams Company (The) $12.04 billion 2.76 $2.04 billion $12.75 28.19
Axalta Coating Systems $4.15 billion 1.95 $875.60 million N/A N/A

Sherwin-Williams Company (The) has higher revenue and earnings than Axalta Coating Systems.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Sherwin-Williams Company (The) and Axalta Coating Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sherwin-Williams Company (The) 1 4 12 0 2.65
Axalta Coating Systems 1 8 6 0 2.33

Sherwin-Williams Company (The) presently has a consensus price target of $357.38, indicating a potential downside of 0.56%. Axalta Coating Systems has a consensus price target of $33.43, indicating a potential upside of 0.21%. Given Axalta Coating Systems’ higher probable upside, analysts plainly believe Axalta Coating Systems is more favorable than Sherwin-Williams Company (The).

Profitability

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

Net Margins Return on Equity Return on Assets
Sherwin-Williams Company (The) 10.02% 71.96% 17.88%
Axalta Coating Systems 6.50% 21.46% 4.47%

Dividends

Sherwin-Williams Company (The) pays an annual dividend of $3.40 per share and has a dividend yield of 0.9%. Axalta Coating Systems does not pay a dividend. Sherwin-Williams Company (The) pays out 26.7% of its earnings in the form of a dividend. Axalta Coating Systems has raised its dividend for 38 consecutive years.

Summary

Sherwin-Williams Company (The) beats Axalta Coating Systems on 11 of the 15 factors compared between the two stocks.

About Sherwin-Williams Company (The)

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 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).

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