Analyzing The Sherwin-Williams (NYSE:SHW) and Ferguson (NASDAQ:FERG)

The Sherwin-Williams (NYSE:SHW) and Ferguson (NASDAQ:FERG) are both large-cap construction companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, earnings, valuation, analyst recommendations, institutional ownership and profitability.

Dividends

The Sherwin-Williams pays an annual dividend of $2.20 per share and has a dividend yield of 0.8%. Ferguson pays an annual dividend of $1.46 per share and has a dividend yield of 1.1%. The Sherwin-Williams pays out 26.9% of its earnings in the form of a dividend. Ferguson pays out 22.5% 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. Ferguson is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

Net Margins Return on Equity Return on Assets
The Sherwin-Williams 11.23% 66.09% 11.88%
Ferguson N/A N/A N/A

Analyst Ratings

This is a summary of recent recommendations for The Sherwin-Williams and Ferguson, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Sherwin-Williams 0 2 16 0 2.89
Ferguson 1 6 2 0 2.11

The Sherwin-Williams presently has a consensus price target of $327.61, suggesting a potential upside of 17.90%. Given The Sherwin-Williams’ stronger consensus rating and higher probable upside, equities analysts plainly believe The Sherwin-Williams is more favorable than Ferguson.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Sherwin-Williams $18.36 billion 4.03 $2.03 billion $8.19 33.97
Ferguson $27.54 billion 1.11 $961.00 million $6.50 20.96

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

Insider & Institutional Ownership

27.5% of The Sherwin-Williams shares are owned by institutional investors. Comparatively, 35.2% of Ferguson shares are owned by institutional investors. 0.5% of The Sherwin-Williams shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

The Sherwin-Williams has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, Ferguson has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500.

Summary

The Sherwin-Williams beats Ferguson on 11 of the 16 factors compared between the two stocks.

The 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. It operates in three segments: The Americas Group, Consumer Brands Group, and Performance Coatings Group. The Americas 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 provides branded and private-label architectural paints, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks, and adhesives to retailers 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 North and South America, the Caribbean, Europe, Asia, and Australia. As of December 31, 2021, it operated 4,774 company-operated stores. The Sherwin-Williams Company was founded in 1866 and is headquartered in Cleveland, Ohio.

Ferguson Company Profile

Ferguson plc distributes plumbing and heating products in the United States, the United Kingdom, Canada, and Central Europe. It offers plumbing and heating solutions to customers in the residential, municipal, civil and industrial markets, and commercial sectors for repair, maintenance, and improvement (RMI), as well as new construction markets. The company also distributes pipes, valves, fittings, hydrants, meters, and related water management products, as well as offers related services, such as water line tapping and pipe fusion services. In addition, it distributes heating, ventilation, air conditioning, refrigeration equipment, and parts and supplies to specialist contractors in the residential and commercial markets for repair and replacement; and PVF products to industrial customers. Further, the company fabricates and supplies fire protection systems and bespoke fabrication services to commercial contractors for new construction and renovation projects, as well as offers products, services, and solutions to enable maintenance of facilities across various RMI markets. Additionally, it offers supply chain management solutions for PVF; and industrial maintenance, repair, and operations specializing in delivering automation, instrumentation, engineered products, and turn-key solutions. The company also sells its home improvement products directly to consumers, as well as through a network of online stores. In addition, it operates its B2B business primarily under the Ferguson brand; and B2C business under the Build.com brand. Further, the company provides products and services for maintenance of multi-family properties, government agencies, hospitality, education, healthcare, and other facilities. It operates a network of 2,194 branches and 19 distribution centers. Ferguson plc was founded in 1887 and is headquartered in Wokingham, the United Kingdom.

Receive News & Ratings for The Sherwin-Williams Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for The Sherwin-Williams and related companies with MarketBeat.com's FREE daily email newsletter.