Sherwin-Williams (NYSE:SHW) versus Sensient Technologies (NYSE:SXT) Financial Contrast

Sherwin-Williams (NYSE:SHW) and Sensient Technologies (NYSE:SXT) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, risk, earnings, institutional ownership, analyst recommendations and valuation.

Analyst Ratings

This is a summary of current ratings and recommmendations for Sherwin-Williams and Sensient Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sherwin-Williams	0	4	11	1	2.81
Sensient Technologies	0	1	2	0	2.67

Sherwin-Williams presently has a consensus price target of $390.87, suggesting a potential upside of 13.34%. Sensient Technologies has a consensus price target of $110.00, suggesting a potential upside of 16.56%. Given Sensient Technologies’ higher possible upside, analysts plainly believe Sensient Technologies is more favorable than Sherwin-Williams.

Dividends

Sherwin-Williams pays an annual dividend of $3.16 per share and has a dividend yield of 0.9%. Sensient Technologies pays an annual dividend of $1.64 per share and has a dividend yield of 1.7%. Sherwin-Williams pays out 30.8% of its earnings in the form of a dividend. Sensient Technologies pays out 51.7% 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.

Valuation & Earnings

This table compares Sherwin-Williams and Sensient Technologies”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sherwin-Williams	$23.28 billion	3.69	$2.68 billion	$10.25	33.64
Sensient Technologies	$1.58 billion	2.54	$124.67 million	$3.17	29.77

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sherwin-Williams	11.05%	66.75%	11.37%
Sensient Technologies	8.56%	12.56%	6.60%

Volatility and Risk

Sherwin-Williams has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, Sensient Technologies has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Institutional & Insider Ownership

77.7% of Sherwin-Williams shares are held by institutional investors. Comparatively, 90.9% of Sensient Technologies shares are held by institutional investors. 0.6% of Sherwin-Williams shares are held by company insiders. Comparatively, 1.2% of Sensient Technologies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Sherwin-Williams beats Sensient Technologies on 14 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 Sensient Technologies

Sensient Technologies Corporation, together with its subsidiaries, develops, manufactures, and markets colors, flavors, and other specialty ingredients in North America, Europe, Asia, Australia, South America, and Africa. The company offers flavor-delivery systems, and compounded and blended products; ingredient products, such as essential oils, natural and synthetic flavors, and natural extracts; and chili powder, paprika, and chili pepper, as well as dehydrated vegetables comprising parsley, celery, and spinach to the food, beverage, and personal care industries. It also provides natural and synthetic color systems for use in foods, beverages, pharmaceuticals, and nutraceuticals; colors and other ingredients for personal care, such as active ingredients, solubilizers, and surface treated pigments; pharmaceutical and nutraceutical excipients, including colors, flavors, coatings, and nutraceutical ingredients; and technical colors for industrial applications under the Sensient Food Colors, Sensient Pharmaceutical Coating Systems, Sensient Cosmetic Technologies, and Sensient Specialty Markets trade names. Sensient Technologies Corporation was incorporated in 1882 and is headquartered in Milwaukee, Wisconsin.