Sherwin-Williams (NYSE: SHW) and Fastenal (NASDAQ:FAST) are both large-cap construction companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.
This table compares Sherwin-Williams and Fastenal’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Sherwin-Williams pays an annual dividend of $3.44 per share and has a dividend yield of 0.9%. Fastenal pays an annual dividend of $1.48 per share and has a dividend yield of 2.9%. Sherwin-Williams pays out 24.1% of its earnings in the form of a dividend. Fastenal pays out 76.7% 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 raised its dividend for 39 consecutive years and Fastenal has raised its dividend for 7 consecutive years.
Valuation and Earnings
This table compares Sherwin-Williams and Fastenal’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Sherwin-Williams||$14.98 billion||2.46||$1.77 billion||$14.27||27.50|
|Fastenal||$4.39 billion||3.31||$578.60 million||$1.93||26.16|
Sherwin-Williams has higher revenue and earnings than Fastenal. Fastenal is trading at a lower price-to-earnings ratio than Sherwin-Williams, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
75.6% of Sherwin-Williams shares are owned by institutional investors. Comparatively, 85.2% of Fastenal shares are owned by institutional investors. 0.8% of Sherwin-Williams shares are owned by insiders. Comparatively, 0.6% of Fastenal shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This is a summary of current ratings for Sherwin-Williams and Fastenal, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Sherwin-Williams currently has a consensus target price of $435.70, indicating a potential upside of 11.04%. Fastenal has a consensus target price of $53.62, indicating a potential upside of 6.19%. Given Sherwin-Williams’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Sherwin-Williams is more favorable than Fastenal.
Volatility & Risk
Sherwin-Williams has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500. Comparatively, Fastenal has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.
Sherwin-Williams beats Fastenal on 12 of the 18 factors compared between the two stocks.
Sherwin-Williams Company Profile
The Sherwin-Williams Company develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North and South America, the Caribbean, Europe, Asia, and Australia. The company operates in three segments: The Americas Group, Consumer Brands Group, and Performance Coatings Group. The Americas Group segment offers architectural paint and coatings, protective and marine products, as well as OEM product finishes and related products through dealers, home centers, distributors, hardware stores, and other retailers. As of December 31, 2017, this segment operated 4,620 company-operated specialty paint stores. The Consumer Brands Group segment provides architectural paints, stains, varnishes, industrial products, wood finish products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks, and adhesives. The Performance Coatings Group segment offers industrial coatings for wood finishing and general industrial applications, automotive refinish products, protective and marine coatings, coil and packaging coatings, and performance-based resins and colorants; and specialty coatings through direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees, and other third party distributors. This segment operated 290 company-operated branches. The Sherwin-Williams Company was founded in 1866 and is headquartered in Cleveland, Ohio.
Fastenal Company Profile
Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, and internationally. It offers fasteners, and other industrial and construction supplies under the Fastenal name. The company's fastener products include threaded fasteners, such as bolts, nuts, screws, studs, and related washers, which are used in manufactured products and construction projects, as well as in the maintenance and repair of machines. It also offers miscellaneous supplies and hardware, including various pins and machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. The company serves the manufacturing market comprising original equipment manufacturers; maintenance, repair, and operations; and non-residential construction market, which includes general, electrical, plumbing, sheet metal, and road contractors. It also serves farmers, truckers, railroads, mining companies, schools, and retail trades; and oil exploration, production, and refinement companies, as well as federal, state, and local governmental entities. As of December 31, 2017, the company distributed its products through a network of 2,383 company owned stores. Fastenal Company was founded in 1967 and is headquartered in Winona, Minnesota.
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