Contrasting Rayonier Advanced Materials (NYSE:RYAM) and Sherwin-Williams (NYSE:SHW)

Sherwin-Williams (NYSE:SHW) and Rayonier Advanced Materials (NYSE:RYAM) are both materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.

Risk and Volatility

Sherwin-Williams has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500. Comparatively, Rayonier Advanced Materials has a beta of 1.84, meaning that its share price is 84% more volatile than the S&P 500.

Institutional & Insider Ownership

77.7% of Sherwin-Williams shares are owned by institutional investors. Comparatively, 68.6% of Rayonier Advanced Materials shares are owned by institutional investors. 0.2% of Sherwin-Williams shares are owned by company insiders. Comparatively, 3.2% of Rayonier Advanced Materials shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Sherwin-Williams pays an annual dividend of $3.20 per share and has a dividend yield of 1.0%. Rayonier Advanced Materials pays an annual dividend of $0.28 per share and has a dividend yield of 4.0%. Sherwin-Williams pays out 29.5% of its earnings in the form of a dividend. Rayonier Advanced Materials pays out -13.3% 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 raised its dividend for 48 consecutive years. Rayonier Advanced Materials is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Sherwin-Williams and Rayonier Advanced Materials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sherwin-Williams	11.01%	67.97%	11.16%
Rayonier Advanced Materials	-9.53%	-46.19%	-7.28%

Valuation & Earnings

This table compares Sherwin-Williams and Rayonier Advanced Materials”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sherwin-Williams	$24.41 billion	3.35	$2.57 billion	$10.85	31.01
Rayonier Advanced Materials	$1.47 billion	0.32	-$420.67 million	($2.10)	-3.33

Sherwin-Williams has higher revenue and earnings than Rayonier Advanced Materials. Rayonier Advanced Materials 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 Recommendations

This is a breakdown of current ratings and target prices for Sherwin-Williams and Rayonier Advanced Materials, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sherwin-Williams	0	10	16	1	2.67
Rayonier Advanced Materials	1	1	1	0	2.00

Sherwin-Williams presently has a consensus price target of $382.08, indicating a potential upside of 13.57%. Rayonier Advanced Materials has a consensus price target of $13.00, indicating a potential upside of 85.95%. Given Rayonier Advanced Materials’ higher possible upside, analysts clearly believe Rayonier Advanced Materials is more favorable than Sherwin-Williams.

Summary

Sherwin-Williams beats Rayonier Advanced Materials on 13 of the 18 factors compared between the two stocks.

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.

About Rayonier Advanced Materials

Rayonier Advanced Materials Inc. manufactures and sells cellulose specialty products in the United States, China, Latin America, Canada, Japan, Europe, Latin America, other Asian countries, and internationally. It operates through High Purity Cellulose, Paperboard, and High-Yield Pulp segments. The company’s products include cellulose specialties, which are natural polymers that are used as raw materials to manufacture a range of consumer-oriented products, such as liquid crystal displays, impact-resistant plastics, thickeners for food products, pharmaceuticals, cosmetics, cigarette filters, high-tenacity rayon yarn for tires and industrial hoses, food casings, paints, and lacquers. It also offers commodity products, such as commodity viscose pulp used in woven applications, including rayon textiles for clothing and other fabrics, as well as in non-woven applications comprising baby wipes, cosmetic and personal wipes, industrial wipes, and mattress ticking; and absorbent materials consisting of fluff fibers that are used as an absorbent medium in disposable baby diapers, feminine hygiene products, incontinence pads, convalescent bed pads, industrial towels and wipes, and non-woven fabrics. In addition, the company provides paperboards for packaging, printing documents, brochures, promotional materials, paperback books and catalog covers, file folders, tags, and lottery tickets; and high-yield pulps to produces hardwood aspen, maple, and birch species for paperboard, packaging, printing and writing papers, and various other paper products. The company was founded in 1926 and is headquartered in Jacksonville, Florida.