Contrasting Sherwin-Williams (NYSE:SHW) and CF Industries (NYSE:CF)

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

Insider and Institutional Ownership

93.1% of CF Industries shares are held by institutional investors. Comparatively, 77.7% of Sherwin-Williams shares are held by institutional investors. 0.5% of CF Industries shares are held by company insiders. Comparatively, 0.2% 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.

Earnings and Valuation

This table compares CF Industries and Sherwin-Williams”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CF Industries	$7.08 billion	2.45	$1.46 billion	$13.49	8.49
Sherwin-Williams	$23.57 billion	3.39	$2.57 billion	$10.85	30.33

Sherwin-Williams has higher revenue and earnings than CF Industries. CF 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.

Risk and Volatility

CF Industries has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500. Comparatively, Sherwin-Williams has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CF Industries	27.12%	24.41%	13.74%
Sherwin-Williams	11.01%	67.97%	11.16%

Analyst Ratings

This is a summary of recent ratings and target prices for CF Industries and Sherwin-Williams, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CF Industries	4	11	5	3	2.30
Sherwin-Williams	0	8	9	1	2.61

CF Industries currently has a consensus price target of $119.00, indicating a potential upside of 3.86%. Sherwin-Williams has a consensus price target of $387.47, indicating a potential upside of 17.74%. Given Sherwin-Williams’ stronger consensus rating and higher possible upside, analysts plainly believe Sherwin-Williams is more favorable than CF Industries.

Dividends

CF Industries pays an annual dividend of $2.40 per share and has a dividend yield of 2.1%. Sherwin-Williams pays an annual dividend of $3.20 per share and has a dividend yield of 1.0%. CF Industries pays out 17.8% of its earnings in the form of a dividend. Sherwin-Williams pays out 29.5% 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. CF Industries has increased its dividend for 3 consecutive years and Sherwin-Williams has increased its dividend for 48 consecutive years. CF Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Sherwin-Williams beats CF Industries on 10 of the 18 factors compared between the two stocks.

About CF Industries

CF Industries Holdings, Inc., together with its subsidiaries, engages in the manufacture and sale of hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities in North America, Europe, and internationally. It operates through Ammonia, Granular Urea, UAN, AN, and Other segments. The company's principal products include anhydrous ammonia, granular urea, urea ammonium nitrate, and ammonium nitrate products. It also offers diesel exhaust fluid, urea liquor, nitric acid, and aqua ammonia products. The company primarily serves cooperatives, independent fertilizer distributors, traders, wholesalers, and industrial users. CF Industries Holdings, Inc. was founded in 1946 and is headquartered in Northbrook, Illinois.

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.