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

Institutional & Insider Ownership

72.9% of Sherwin-Williams Company (The) shares are owned by institutional investors. Comparatively, 72.7% of RPM International shares are owned by institutional investors. 1.7% of Sherwin-Williams Company (The) shares are owned by insiders. Comparatively, 2.2% of RPM International shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Sherwin-Williams Company (The) pays an annual dividend of $3.40 per share and has a dividend yield of 1.0%. RPM International pays an annual dividend of $1.20 per share and has a dividend yield of 2.3%. Sherwin-Williams Company (The) pays out 28.1% of its earnings in the form of a dividend. RPM International pays out 90.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sherwin-Williams Company (The) has increased its dividend for 38 consecutive years and RPM International has increased its dividend for 42 consecutive years. RPM International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Sherwin-Williams Company (The) has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500. Comparatively, RPM International has a beta of 1.54, meaning that its share price is 54% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Sherwin-Williams Company (The) and RPM International, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sherwin-Williams Company (The) 1 5 12 0 2.61
RPM International 0 2 4 0 2.67

Sherwin-Williams Company (The) presently has a consensus target price of $362.46, indicating a potential upside of 8.17%. RPM International has a consensus target price of $57.20, indicating a potential upside of 11.70%. Given RPM International’s stronger consensus rating and higher possible upside, analysts plainly believe RPM International is more favorable than Sherwin-Williams Company (The).

Profitability

This table compares Sherwin-Williams Company (The) and RPM International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sherwin-Williams Company (The) 9.14% 63.81% 12.23%
RPM International 3.67% 25.02% 7.14%

Valuation and Earnings

This table compares Sherwin-Williams Company (The) and RPM International’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sherwin-Williams Company (The) $12.56 billion 2.48 $2.11 billion $12.12 27.65
RPM International $4.96 billion 1.38 $638.94 million $1.32 38.80

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

Summary

Sherwin-Williams Company (The) beats RPM International on 11 of the 17 factors compared between the two stocks.

Sherwin-Williams Company (The) Company Profile

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.

RPM International Company Profile

RPM International Inc., through its subsidiaries, manufactures, markets and sells various specialty chemical product lines, including specialty paints, protective coatings, roofing systems, sealants and adhesives, focusing on the maintenance of industrial, specialty and consumer markets. The Company operates through three segments: the industrial reportable segment (industrial segment), the specialty reportable segment (specialty segment) and the consumer reportable segment (consumer segment). Its family of products includes those marketed under brand names, such as API, Carboline, CAVE, DAP, Day-Glo, Dri-Eaz, Dryvit, Euclid, EUCO, Fibergrate, Flecto, Flowcrete, Grupo PV, Hummervoll, illbruck, Mohawk, Rust-Oleum, Stonhard, TCI, Toxement, Tremco, Tuf-Strand, Universal Sealants, Viapol, Watco and Zinsser. As of May 31, 2016, its subsidiaries marketed products in approximately 164 countries and territories, and operated manufacturing facilities in approximately 120 locations.

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