Analyzing Sherwin-Williams (NYSE:SHW) and Air Products and Chemicals (NYSE:APD)

Air Products and Chemicals (NYSE:APD) and Sherwin-Williams (NYSE:SHW) are both large-cap materials companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, dividends and analyst recommendations.

Institutional and Insider Ownership

81.7% of Air Products and Chemicals shares are owned by institutional investors. Comparatively, 77.7% of Sherwin-Williams shares are owned by institutional investors. 1.9% of Air Products and Chemicals shares are owned by insiders. Comparatively, 0.2% of Sherwin-Williams shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Air Products and Chemicals pays an annual dividend of $7.24 per share and has a dividend yield of 2.5%. Sherwin-Williams pays an annual dividend of $3.20 per share and has a dividend yield of 1.0%. Air Products and Chemicals pays out -3,290.9% of its earnings in the form of a dividend. Sherwin-Williams pays out 29.5% 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. Air Products and Chemicals has raised its dividend for 43 consecutive years and Sherwin-Williams has raised its dividend for 48 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Air Products and Chemicals and Sherwin-Williams”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Air Products and Chemicals	$12.04 billion	5.44	-$394.50 million	($0.22)	-1,337.18
Sherwin-Williams	$23.57 billion	3.26	$2.57 billion	$10.85	29.19

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

Volatility & Risk

Air Products and Chemicals has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Sherwin-Williams has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Air Products and Chemicals and Sherwin-Williams, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Air Products and Chemicals	0	6	10	1	2.71
Sherwin-Williams	0	6	10	1	2.71

Air Products and Chemicals presently has a consensus price target of $336.53, indicating a potential upside of 14.40%. Sherwin-Williams has a consensus price target of $386.29, indicating a potential upside of 21.96%. Given Sherwin-Williams’ higher possible upside, analysts plainly believe Sherwin-Williams is more favorable than Air Products and Chemicals.

Profitability

This table compares Air Products and Chemicals and Sherwin-Williams’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Air Products and Chemicals	-0.38%	16.87%	7.18%
Sherwin-Williams	11.01%	67.97%	11.16%

Summary

Sherwin-Williams beats Air Products and Chemicals on 10 of the 15 factors compared between the two stocks.

About Air Products and Chemicals

Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and related services in the Americas, Asia, Europe, the Middle East, India, and internationally. The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas; and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food, and metals. It also designs and manufactures equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. The company was founded in 1940 and is headquartered in Allentown, Pennsylvania.

About Sherwin-Williams

The Sherwin-Williams Company engages in the development, manufacture, distribution, and sale of paints, coating, and related products to professional, industrial, commercial, and retail customers. It operates through three segments: Paint Stores Group, Consumer Brands Group, and Performance Coatings Group. The Paint Stores Group segment offers architectural paints and coatings, and protective and marine products, as well as OEM product finishes and related products for architectural and industrial paint contractors, and do-it-yourself homeowners. The Consumer Brands Group segment supplies a portfolio of branded and private-label architectural paints, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks, and adhesives to retailers, including home centers and hardware stores, and dedicated dealers and distributors. The Performance Coatings Group segment develops and sells industrial coatings for wood finishing and general industrial applications, automotive refinish products, protective and marine coatings, coil coatings, packaging coatings, and performance-based resins and colorants. It serves retailers, dealers, jobbers, licensees, and other third-party distributors through its branches and direct sales staff, as well as through outside sales representatives. The company has operations primarily in the North and South America, the Caribbean, Europe, Asia, and Australia. The Sherwin-Williams Company was founded in 1866 and is headquartered in Cleveland, Ohio.