Analyzing Sherwin-Williams (NYSE:SHW) & Novozymes A/S (OTCMKTS:NVZMY)

Novozymes A/S (OTCMKTS:NVZMY) and Sherwin-Williams (NYSE:SHW) are both large-cap basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, dividends, institutional ownership, profitability, valuation, analyst recommendations and risk.

Valuation & Earnings

This table compares Novozymes A/S 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
Novozymes A/S	$4.70 billion	5.76	$660.28 million	$1.48	44.15
Sherwin-Williams	$23.57 billion	3.58	$2.57 billion	$10.42	32.83

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

Dividends

Novozymes A/S pays an annual dividend of $0.81 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%. Novozymes A/S pays out 54.7% of its earnings in the form of a dividend. Sherwin-Williams pays out 30.7% 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. Sherwin-Williams has raised its dividend for 48 consecutive years.

Profitability

This table compares Novozymes A/S and Sherwin-Williams’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Novozymes A/S	14.22%	6.52%	4.30%
Sherwin-Williams	10.86%	64.55%	11.10%

Risk and Volatility

Novozymes A/S has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500. Comparatively, Sherwin-Williams has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Novozymes A/S and Sherwin-Williams, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Novozymes A/S	0	1	0	2	3.33
Sherwin-Williams	0	6	8	0	2.57

Sherwin-Williams has a consensus price target of $372.15, indicating a potential upside of 8.78%. Given Sherwin-Williams’ higher probable upside, analysts plainly believe Sherwin-Williams is more favorable than Novozymes A/S.

Institutional & Insider Ownership

0.0% of Novozymes A/S shares are held by institutional investors. Comparatively, 77.7% of Sherwin-Williams shares are held by institutional investors. 0.2% of Sherwin-Williams shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Sherwin-Williams beats Novozymes A/S on 12 of the 18 factors compared between the two stocks.

About Novozymes A/S

Novozymes A/S produces and sells industrial enzymes, microorganisms, and probiotics in Denmark, rest of Europe, North America, Asia Pacific, the Middle East, Africa, Latin America, and internationally. The company offers protein solutions for the food and beverage industry. It also offers industrial hygiene, drain openers, hard surface, medical cleaning, septic tanks, ware washing, and professional laundry services. In addition, the company provides dishwashing, softener, microbial and medical cleaning services. Further, it provides corn, cotton, forages, peanuts, pulses, soybeans, wheat, small grains, bioyield, and biocontrol solutions; warm water species, recirculating aquaculture system; animal health and nutrition solutions; fiber modification, bleach boosting, deposit control, and starch modification solutions. Additionally, the company provides carbon capture, leather and textiles solutions; enzyme solutions, including corn and wheat separation, liquefaction, saccharification, filtration, isomerization, maltose, and specialties solutions; warm water species and recirculating aquaculture system solutions; human health solutions, comprising brain, oral, protective and immune, and gastrointestinal health solutions; ethanol, biodiesel, renewable diesel, education, wastewater, and sewage sludge, and renewable diesel solutions; agriculture and industry, biogas food waste, food waste, biocatalysis, cell culture, diagnostics, enzyme, and biogas solutions. Furthermore, it provides lipases, proteases, oxidoreductases, and carbohydrases. Novozymes A/S was founded in 1925 and is based in Bagsvaerd, Denmark.

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.