Critical Survey: Sherwin-Williams (NYSE:SHW) vs. Scotts Miracle-Gro (NYSE:SMG)

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

Volatility & Risk

Sherwin-Williams has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500. Comparatively, Scotts Miracle-Gro has a beta of 1.83, indicating that its share price is 83% more volatile than the S&P 500.

Dividends

Sherwin-Williams pays an annual dividend of $3.20 per share and has a dividend yield of 1.0%. Scotts Miracle-Gro pays an annual dividend of $2.64 per share and has a dividend yield of 5.2%. Sherwin-Williams pays out 29.5% of its earnings in the form of a dividend. Scotts Miracle-Gro pays out 229.6% 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.

Institutional & Insider Ownership

77.7% of Sherwin-Williams shares are owned by institutional investors. Comparatively, 74.1% of Scotts Miracle-Gro shares are owned by institutional investors. 0.2% of Sherwin-Williams shares are owned by company insiders. Comparatively, 24.4% of Scotts Miracle-Gro shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Sherwin-Williams and Scotts Miracle-Gro’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sherwin-Williams	11.01%	67.97%	11.16%
Scotts Miracle-Gro	2.19%	-81.90%	8.97%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Sherwin-Williams and Scotts Miracle-Gro, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sherwin-Williams	0	8	9	1	2.61
Scotts Miracle-Gro	0	3	3	0	2.50

Sherwin-Williams currently has a consensus price target of $387.47, suggesting a potential upside of 17.74%. Scotts Miracle-Gro has a consensus price target of $75.40, suggesting a potential upside of 47.96%. Given Scotts Miracle-Gro’s higher probable upside, analysts plainly believe Scotts Miracle-Gro is more favorable than Sherwin-Williams.

Earnings and Valuation

This table compares Sherwin-Williams and Scotts Miracle-Gro”s gross 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	3.39	$2.57 billion	$10.85	30.33
Scotts Miracle-Gro	$3.41 billion	0.87	$145.20 million	$1.15	44.31

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

Summary

Sherwin-Williams beats Scotts Miracle-Gro on 13 of the 18 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 Scotts Miracle-Gro

The Scotts Miracle-Gro Company, together with its subsidiaries, manufactures, markets, and sells products for lawn, garden care, and indoor and hydroponic gardening in the United States and internationally. It operates through three segments: U.S. Consumer, Hawthorne, and Other. The company provides lawn care products, comprising lawn fertilizers, grass seed products, spreaders, and other durable products, as well as lawn-related weed, pest, and disease control products; and gardening and landscape products, which include water-soluble and continuous-release plant foods, potting mixes, garden soils, mulches and ground cover products, plant-related pest and disease control products, organic garden products, and live goods and seeding solutions. It offers hydroponic products that help users to grow plants, flowers, and vegetables using little or no soil; lighting systems and components for use in hydroponic and indoor gardening applications; insect, rodent, and weed control products for home areas; and non-selective weed killer products. The company sells its products under the Scotts, Turf Builder, EZ Seed, PatchMaster, Thick'R Lawn, GrubEx, EdgeGuard, Handy Green II, Miracle-Gro, LiquaFeed, Shake N Feed, Hyponex, Earthgro, Nature Scapes, Ortho, Miracle-Gro Performance Organics, Miracle-Gro Organic Choice, Whitney Farms, EcoScraps, Mother Earth, Botanicare, General Hydroponics, Cyco, Gavita, Agrolux, HydroLogic Purification System, Gro Pro, AeroGarden, Titan, Tomcat, Ortho Weed B Gon, Roundup, Groundclear, and Alchemist brands. It serves home centers, mass merchandisers, warehouse clubs, large hardware chains, independent hardware stores, nurseries, garden centers, e-commerce platforms, and food and drug stores, as well as indoor gardening and hydroponic distributors, retailers, and growers. The Scotts Miracle-Gro Company was founded in 1868 and is headquartered in Marysville, Ohio.