Sherwin-Williams (NYSE:SHW) vs. Linde (NASDAQ:LIN) Critical Contrast

Linde (NASDAQ:LIN) 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 profitability, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.

Insider & Institutional Ownership

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Linde and Sherwin-Williams, as reported by MarketBeat.com.

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

Linde currently has a consensus price target of $508.20, suggesting a potential upside of 1.30%. Sherwin-Williams has a consensus price target of $387.67, suggesting a potential upside of 11.27%. Given Sherwin-Williams’ higher probable upside, analysts plainly believe Sherwin-Williams is more favorable than Linde.

Profitability

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

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

Valuation and Earnings

This table compares Linde 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
Linde	$33.99 billion	6.84	$6.90 billion	$14.59	34.39
Sherwin-Williams	$23.57 billion	3.66	$2.57 billion	$10.27	33.92

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

Volatility & Risk

Linde has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500. Comparatively, Sherwin-Williams has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500.

Dividends

Linde pays an annual dividend of $6.00 per share and has a dividend yield of 1.2%. Sherwin-Williams pays an annual dividend of $3.20 per share and has a dividend yield of 0.9%. Linde pays out 41.1% of its earnings in the form of a dividend. Sherwin-Williams pays out 31.2% 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. Linde has increased its dividend for 5 consecutive years and Sherwin-Williams has increased its dividend for 48 consecutive years.

Summary

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

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.

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.