Sherwin-Williams (NYSE:SHW) and GrowGeneration (OTCMKTS:GRWG) are both construction companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Valuation & Earnings

This table compares Sherwin-Williams and GrowGeneration’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sherwin-Williams $14.98 billion 2.56 $1.77 billion $14.27 28.73
GrowGeneration $14.36 million 6.16 -$2.54 million ($0.18) -17.77

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

Analyst Ratings

This is a summary of current ratings and price targets for Sherwin-Williams and GrowGeneration, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sherwin-Williams 0 8 13 1 2.68
GrowGeneration 0 0 0 0 N/A

Sherwin-Williams presently has a consensus price target of $468.00, indicating a potential upside of 12.80%. Given Sherwin-Williams’ higher probable upside, equities research analysts clearly believe Sherwin-Williams is more favorable than GrowGeneration.

Profitability

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

Net Margins Return on Equity Return on Assets
Sherwin-Williams 10.92% 45.22% 8.49%
GrowGeneration -17.50% -20.21% -15.79%

Insider and Institutional Ownership

78.0% of Sherwin-Williams shares are owned by institutional investors. Comparatively, 0.1% of GrowGeneration shares are owned by institutional investors. 0.8% of Sherwin-Williams shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Sherwin-Williams pays an annual dividend of $3.44 per share and has a dividend yield of 0.8%. GrowGeneration does not pay a dividend. Sherwin-Williams pays out 24.1% of its earnings in the form of a dividend. Sherwin-Williams has raised its dividend for 39 consecutive years.

Summary

Sherwin-Williams beats GrowGeneration on 14 of the 16 factors compared between the two stocks.

Sherwin-Williams Company Profile

The Sherwin-Williams Company develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North and South America, the Caribbean, Europe, Asia, and Australia. The company operates in three segments: The Americas Group, Consumer Brands Group, and Performance Coatings Group. The Americas Group segment offers architectural paint and coatings, protective and marine products, as well as OEM product finishes and related products through dealers, home centers, distributors, hardware stores, and other retailers. As of December 31, 2017, this segment operated 4,620 company-operated specialty paint stores. The Consumer Brands Group segment provides architectural paints, stains, varnishes, industrial products, wood finish products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks, and adhesives. The Performance Coatings Group segment offers industrial coatings for wood finishing and general industrial applications, automotive refinish products, protective and marine coatings, coil and packaging coatings, and performance-based resins and colorants; and specialty coatings through direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees, and other third party distributors. This segment operated 290 company-operated branches. The Sherwin-Williams Company was founded in 1866 and is headquartered in Cleveland, Ohio.

GrowGeneration Company Profile

GrowGeneration Corp., through its subsidiaries, operates retail hydroponic stores. It offers farming soil, hydroponic equipment, lighting, plant nutrients, and various other products. The company serves home growers of organic vegetables and fruits, do-it yourselfers, and growers in the cannabis related markets. As of December 31, 2017, it operated 13 retail hydroponic/gardening stores, including 8 stores located in Colorado, 2 stores in California, 2 stores in Nevada, and 1 store in Washington. The company was formerly known as Easylife Corp. GrowGeneration Corp. was founded in 2008 and is based in Denver, Colorado.

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