Critical Survey: Linde (NASDAQ:LIN) & Sherwin-Williams (NYSE:SHW)

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

Dividends

Sherwin-Williams pays an annual dividend of $3.16 per share and has a dividend yield of 0.9%. Linde pays an annual dividend of $6.00 per share and has a dividend yield of 1.2%. Sherwin-Williams pays out 30.8% of its earnings in the form of a dividend. Linde pays out 41.1% 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 increased its dividend for 48 consecutive years and Linde has increased its dividend for 5 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sherwin-Williams	10.90%	65.26%	11.22%
Linde	20.30%	19.52%	9.10%

Volatility & Risk

Sherwin-Williams has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500. Comparatively, Linde has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Sherwin-Williams and Linde, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sherwin-Williams	1	5	11	0	2.59
Linde	0	2	8	2	3.00

Sherwin-Williams currently has a consensus price target of $387.67, suggesting a potential upside of 7.07%. Linde has a consensus price target of $508.20, suggesting a potential upside of 0.02%. Given Sherwin-Williams’ higher probable upside, research analysts clearly believe Sherwin-Williams is more favorable than Linde.

Insider and Institutional Ownership

77.7% of Sherwin-Williams shares are owned by institutional investors. Comparatively, 82.8% of Linde shares are owned by institutional investors. 0.6% of Sherwin-Williams shares are owned by company insiders. Comparatively, 0.7% of Linde shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Sherwin-Williams and Linde”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sherwin-Williams	$23.57 billion	3.81	$2.57 billion	$10.27	35.26
Linde	$33.99 billion	6.93	$6.90 billion	$14.59	34.82

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

Summary

Linde beats Sherwin-Williams on 10 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 Linde

Linde plc operates as an industrial gas company in the Americas, Europe, the Middle East, Africa, Asia, and South Pacific. It offers atmospheric gases, including oxygen, nitrogen, argon, and rare gases; and process gases, such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. The company also designs and constructs turnkey process plants for third-party customers, as well as for the gas businesses in various locations, such as air separation, hydrogen, synthesis, olefin, and natural gas plants. It serves a range of industries, including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. The company was founded in 1879 and is based in Woking, the United Kingdom.