Head-To-Head Analysis: Sherwin-Williams (NYSE:SHW) vs. Celanese (NYSE:CE)

Sherwin-Williams (NYSE:SHW) and Celanese (NYSE:CE) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Volatility and Risk

Sherwin-Williams has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500. Comparatively, Celanese has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Insider and Institutional Ownership

77.7% of Sherwin-Williams shares are owned by institutional investors. Comparatively, 98.9% of Celanese shares are owned by institutional investors. 0.2% of Sherwin-Williams shares are owned by insiders. Comparatively, 0.3% of Celanese shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sherwin-Williams	$23.57 billion	3.25	$2.57 billion	$10.42	29.81
Celanese	$9.54 billion	0.59	-$1.17 billion	($10.01)	-5.10

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

Dividends

Sherwin-Williams pays an annual dividend of $3.20 per share and has a dividend yield of 1.0%. Celanese pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Sherwin-Williams pays out 30.7% of its earnings in the form of a dividend. Celanese pays out -1.2% 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 increased its dividend for 48 consecutive years. Sherwin-Williams is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sherwin-Williams	10.86%	64.55%	11.10%
Celanese	-11.54%	9.92%	2.12%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Sherwin-Williams and Celanese, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sherwin-Williams	0	6	7	1	2.64
Celanese	1	7	10	0	2.50

Sherwin-Williams currently has a consensus target price of $366.77, indicating a potential upside of 18.09%. Celanese has a consensus target price of $67.81, indicating a potential upside of 32.80%. Given Celanese’s higher probable upside, analysts plainly believe Celanese is more favorable than Sherwin-Williams.

Summary

Sherwin-Williams beats Celanese 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 Celanese

Celanese Corporation, a chemical and specialty materials company, manufactures and sells high performance engineered polymers in the United States and internationally. It operates through Engineered Materials and Acetyl Chain. The Engineered Materials segment develops, produces, and supplies specialty polymers for automotive and medical applications, as well as for use in industrial products and consumer electronics. The Acetyl Chain segment produces and supplies acetyl products, including acetic acid, vinyl acetate monomers, acetic anhydride, and acetate esters that are used as starting materials for colorants, paints, adhesives, coatings, and pharmaceuticals; and organic solvents and intermediates for pharmaceutical, agricultural, and chemical products. It also offers vinyl acetate-based emulsions for use in paints and coatings, adhesives, construction, glass fiber, textiles, and paper applications; and ethylene vinyl acetate resins and compounds, as well as low-density polyethylene for use in flexible packaging films, lamination film products, hot melt adhesives, automotive parts, and carpeting applications. In addition, it provides redispersible powders (RDP) for use in construction applications, including flooring, plasters, insulation, tiling, and waterproofing. Celanese Corporation was founded in 1918 and is headquartered in Irving, Texas.