Head to Head Analysis: Sherwin-Williams (NYSE:SHW) vs. Ecolab (NYSE:ECL)

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Ecolab and Sherwin-Williams, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ecolab	0	5	13	3	2.90
Sherwin-Williams	0	5	10	1	2.75

Ecolab currently has a consensus target price of $295.14, suggesting a potential upside of 12.99%. Sherwin-Williams has a consensus target price of $390.87, suggesting a potential upside of 18.69%. Given Sherwin-Williams’ higher possible upside, analysts clearly believe Sherwin-Williams is more favorable than Ecolab.

Dividends

Ecolab pays an annual dividend of $2.60 per share and has a dividend yield of 1.0%. Sherwin-Williams pays an annual dividend of $3.16 per share and has a dividend yield of 1.0%. Ecolab pays out 37.4% of its earnings in the form of a dividend. Sherwin-Williams pays out 30.8% 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. Ecolab has increased its dividend for 33 consecutive years and Sherwin-Williams has increased its dividend for 48 consecutive years.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ecolab	$15.74 billion	4.70	$2.11 billion	$6.96	37.53
Sherwin-Williams	$23.10 billion	3.53	$2.68 billion	$10.25	32.13

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

Volatility and Risk

Ecolab has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500. Comparatively, Sherwin-Williams has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ecolab	12.49%	22.55%	8.98%
Sherwin-Williams	11.05%	66.75%	11.37%

Insider & Institutional Ownership

74.9% of Ecolab shares are owned by institutional investors. Comparatively, 77.7% of Sherwin-Williams shares are owned by institutional investors. 0.0% of Ecolab shares are owned by company insiders. Comparatively, 0.6% of Sherwin-Williams 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.

Summary

Sherwin-Williams beats Ecolab on 11 of the 18 factors compared between the two stocks.

About Ecolab

Ecolab Inc. provides water, hygiene, and infection prevention solutions and services in the United States and internationally. The company operates through three segments: Global Industrial; Global Institutional & Specialty; and Global Healthcare & Life Sciences. The Global Industrial segment offers water treatment and process applications, and cleaning and sanitizing solutions to manufacturing, food and beverage processing, transportation, chemical, metals and mining, power generation, pulp and paper, commercial laundry, petroleum, refining, and petrochemical industries. Its Global Institutional & Specialty segment provides specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, government and education, and retail industries. The Global Healthcare & Life Sciences segment offers specialized cleaning and sanitizing products to the healthcare, personal care, and pharmaceutical industries, such as infection prevention and surgical solutions, and end-to-end cleaning and contamination control solutions under the Ecolab, Microtek, and Anios brand names. In addition, the company provides pest elimination services to detect, eliminate, and prevent pests, such as rodents and insects in restaurants, food and beverage processors, hotels, grocery operations, and other commercial segments including education, life sciences, and healthcare customers. Further, it offers colloidal silica for binding and polishing applications in semiconductor, catalyst, and aerospace component manufacturing, as well as chemical industries; and products and services that manage wash process through custom designed programs, premium products, dispensing equipment, water and energy management, and reduction, as well as real time data management. It sells its products through field sales and corporate account personnel, distributors, and dealers. Ecolab Inc. was founded in 1923 and is headquartered in Saint Paul, Minnesota.

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.