Analyzing Trinseo (NYSE:TSE) & Sherwin-Williams (NYSE:SHW)

Trinseo (NYSE:TSE) and Sherwin-Williams (NYSE:SHW) are both basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, risk, valuation, profitability, dividends, analyst recommendations and institutional ownership.

Dividends

Trinseo pays an annual dividend of $0.04 per share and has a dividend yield of 1.7%. Sherwin-Williams pays an annual dividend of $3.16 per share and has a dividend yield of 0.9%. Trinseo pays out -0.4% of its earnings in the form of a dividend. Sherwin-Williams pays out 31.3% 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. Trinseo has raised its dividend for 1 consecutive years and Sherwin-Williams has raised its dividend for 48 consecutive years. Trinseo is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trinseo	$3.51 billion	0.02	-$348.50 million	($10.97)	-0.22
Sherwin-Williams	$23.10 billion	3.95	$2.68 billion	$10.08	36.30

Sherwin-Williams has higher revenue and earnings than Trinseo. Trinseo 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 Trinseo and Sherwin-Williams’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trinseo	-11.96%	N/A	-10.21%
Sherwin-Williams	11.03%	66.91%	11.48%

Institutional and Insider Ownership

82.7% of Trinseo shares are owned by institutional investors. Comparatively, 77.7% of Sherwin-Williams shares are owned by institutional investors. 4.5% of Trinseo shares are owned by insiders. Comparatively, 0.6% of Sherwin-Williams shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

Trinseo has a beta of 1.44, indicating that its share price is 44% more volatile than the S&P 500. Comparatively, Sherwin-Williams has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Trinseo and Sherwin-Williams, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trinseo	0	0	0	0	0.00
Sherwin-Williams	0	6	10	1	2.71

Sherwin-Williams has a consensus price target of $387.27, suggesting a potential upside of 5.83%. Given Sherwin-Williams’ stronger consensus rating and higher probable upside, analysts clearly believe Sherwin-Williams is more favorable than Trinseo.

Summary

Sherwin-Williams beats Trinseo on 13 of the 18 factors compared between the two stocks.

About Trinseo

Trinseo PLC operates as a specialty material solutions provider in the United States, Europe, the Asia-Pacific, and internationally. It operates through five segments: Engineered Materials, Latex Binders, Plastics Solutions, Polystyrene, and Americas Styrenics. The Engineered Materials segment offers rigid thermoplastic compounds and blends, soft thermoplastic, continuous cast, cell cast, activated methyl methacrylates (MMA), PMMA resins, and extruded PMMA sheets and resins for consumer electronics, medical, footwear, automotive, and building and construction applications under the EMERGE, CALIBRE, PLEXIGLAS, ALTUGLAS, ACRYSPA, AVONITE, STUDIO, MEGOL, APILON, APIGO, and APINAT brands. The Latex Binders segment provides styrene-butadiene latex, and other latex polymers and binders primarily for coated paper and packaging board, carpet, and artificial turf backings, as well as the adhesive, building and construction, and technical textile paper market. The Plastics Solutions segment offers acrylonitrile-butadiene-styrene, styrene-acrylonitrile, polycarbonate, and compounds and blends for automotive and other applications under the MAGNUM brand. The Polystyrene segment provides general purpose polystyrenes and high impact polystyrene for use in appliances, food packaging and food service disposables, consumer electronics, and building and construction materials under the STYRON brand. The Americas Styrenics segment provides styrene and polystyrene for appliances, food packaging, food service disposables, consumer electronics, and building and construction materials applications. Trinseo PLC was incorporated in 2015 and is headquartered in Wayne, Pennsylvania.

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.