Sherwin-Williams (NYSE:SHW – Get Free Report) and NL Industries (NYSE:NL – Get Free Report) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, earnings, institutional ownership, valuation and dividends.
Profitability
This table compares Sherwin-Williams and NL Industries’ 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% |
| NL Industries | 6.10% | 2.36% | 1.83% |
Institutional and Insider Ownership
77.7% of Sherwin-Williams shares are owned by institutional investors. Comparatively, 10.7% of NL Industries shares are owned by institutional investors. 0.6% of Sherwin-Williams shares are owned by company insiders. Comparatively, 0.3% of NL Industries shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sherwin-Williams | 1 | 5 | 11 | 0 | 2.59 |
| NL Industries | 0 | 1 | 0 | 0 | 2.00 |
Sherwin-Williams currently has a consensus price target of $387.67, suggesting a potential upside of 7.57%. Given Sherwin-Williams’ stronger consensus rating and higher probable upside, equities analysts clearly believe Sherwin-Williams is more favorable than NL Industries.
Dividends
Sherwin-Williams pays an annual dividend of $3.16 per share and has a dividend yield of 0.9%. NL Industries pays an annual dividend of $0.36 per share and has a dividend yield of 5.7%. Sherwin-Williams pays out 30.8% of its earnings in the form of a dividend. NL Industries pays out 180.0% 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 has increased its dividend for 48 consecutive years and NL Industries has increased its dividend for 2 consecutive years.
Valuation and Earnings
This table compares Sherwin-Williams and NL Industries”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sherwin-Williams | $23.57 billion | 3.79 | $2.57 billion | $10.27 | 35.09 |
| NL Industries | $145.90 million | 2.10 | $67.23 million | $0.20 | 31.35 |
Sherwin-Williams has higher revenue and earnings than NL Industries. NL Industries is trading at a lower price-to-earnings ratio than Sherwin-Williams, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Sherwin-Williams has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500. Comparatively, NL Industries has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500.
Summary
Sherwin-Williams beats NL Industries on 16 of the 17 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 NL Industries
NL Industries, Inc., through its subsidiary, CompX International Inc., operates in the component products industry in Europe, North America, the Asia Pacific, and internationally. The company manufactures and sells mechanical and electronic cabinet locks and other locking mechanisms, including disc tumbler locks; pin tumbler locking mechanisms under KeSet, System 64, TuBar, and Turbine brands; and electronic locks under CompX eLock and StealthLock brands for use in various applications, such as mailboxes, ignition systems, file cabinets, desk drawers, tool storage cabinets, high security medical cabinetry, integrated inventory and access control secured narcotics boxes, electronic circuit panels, storage compartments, gas station security, vending and cash containment machines. It also offers original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers, and other exhaust components; gauges, such as GPS speedometers and tachometers; mechanical and electronic controls and throttles; wake enhancement devices, trim tabs, steering wheels, and other billet aluminum accessories; dash panels, LED indicators, wire harnesses, and other accessories; and grab handles, pin cleats, and other accessories; primarily for performance and ski/wakeboard and performance boats. In addition, the company produces and markets value-added titanium dioxide pigments, a base industrial product used in imparting whiteness, brightness, opacity, and durability to a diverse range of customer applications and end-use markets, including coatings, plastics, paper, inks, cosmetics, pharmaceuticals, and other industrial and consumer products. The company sells its component products directly to original equipment manufacturers, as well as through distributors. NL Industries, Inc. was founded in 1891 and is based in Dallas, Texas. NL Industries, Inc. operates as a subsidiary of Valhi, Inc.
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