Head to Head Review: Sherwin-Williams (NYSE:SHW) and Quaker Houghton (NYSE:KWR)

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

Analyst Recommendations

This is a breakdown of recent recommendations for Quaker Houghton and Sherwin-Williams, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Quaker Houghton	1	2	3	0	2.33
Sherwin-Williams	0	4	11	1	2.81

Quaker Houghton currently has a consensus price target of $152.33, suggesting a potential upside of 5.62%. Sherwin-Williams has a consensus price target of $390.07, suggesting a potential upside of 19.86%. Given Sherwin-Williams’ stronger consensus rating and higher possible upside, analysts plainly believe Sherwin-Williams is more favorable than Quaker Houghton.

Insider & Institutional Ownership

77.5% of Quaker Houghton shares are held by institutional investors. Comparatively, 77.7% of Sherwin-Williams shares are held by institutional investors. 1.1% of Quaker Houghton shares are held by company insiders. Comparatively, 0.6% of Sherwin-Williams shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Quaker Houghton has a beta of 1.33, suggesting that its stock price is 33% more 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.

Dividends

Quaker Houghton pays an annual dividend of $2.03 per share and has a dividend yield of 1.4%. Sherwin-Williams pays an annual dividend of $3.16 per share and has a dividend yield of 1.0%. Quaker Houghton pays out -414.3% 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. Quaker Houghton has raised its dividend for 17 consecutive years and Sherwin-Williams has raised its dividend for 48 consecutive years. Quaker Houghton is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Quaker Houghton and Sherwin-Williams”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Quaker Houghton	$1.86 billion	1.34	$116.64 million	($0.49)	-294.34
Sherwin-Williams	$23.10 billion	3.49	$2.68 billion	$10.25	31.75

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

	Net Margins	Return on Equity	Return on Assets
Quaker Houghton	-0.48%	8.64%	4.31%
Sherwin-Williams	11.05%	66.75%	11.37%

Summary

Sherwin-Williams beats Quaker Houghton on 14 of the 18 factors compared between the two stocks.

About Quaker Houghton

Quaker Chemical Corporation, together with its subsidiaries, develops, produces, and markets various formulated specialty chemical products for a range of heavy industrial and manufacturing applications in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers metal removal fluids, cleaning fluids, corrosion inhibitors, metal drawing and forming fluids, die-cast mold releases, heat treatment and quenchants, metal forging fluids, hydraulic fluids, specialty greases, offshore sub-sea energy control fluids, rolling lubricants, rod and wire drawing fluids, and surface treatment chemicals. The company also provides chemical management services. It serves steel, aluminum, automotive, aerospace, offshore, container, mining, and metalworking companies. The company was founded in 1918 and is headquartered in Conshohocken, 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.