Contrasting Sherwin-Williams (NYSE:SHW) and International Flavors & Fragrances (NYSE:IFF)

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

Dividends

International Flavors & Fragrances pays an annual dividend of $1.60 per share and has a dividend yield of 1.9%. Sherwin-Williams pays an annual dividend of $3.20 per share and has a dividend yield of 0.9%. International Flavors & Fragrances pays out 48.9% 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 increased its dividend for 48 consecutive years.

Insider and Institutional Ownership

96.0% of International Flavors & Fragrances shares are owned by institutional investors. Comparatively, 77.7% of Sherwin-Williams shares are owned by institutional investors. 1.1% of International Flavors & Fragrances shares are owned by company insiders. Comparatively, 0.2% of Sherwin-Williams shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares International Flavors & Fragrances 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
International Flavors & Fragrances	$10.79 billion	1.96	-$361.00 million	$3.27	25.36
Sherwin-Williams	$23.57 billion	3.66	$2.57 billion	$10.42	33.55

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

Analyst Recommendations

This is a summary of recent ratings and target prices for International Flavors & Fragrances and Sherwin-Williams, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
International Flavors & Fragrances	0	5	13	0	2.72
Sherwin-Williams	0	6	8	0	2.57

International Flavors & Fragrances currently has a consensus target price of $91.16, suggesting a potential upside of 9.94%. Sherwin-Williams has a consensus target price of $372.15, suggesting a potential upside of 6.45%. Given International Flavors & Fragrances’ stronger consensus rating and higher possible upside, equities research analysts plainly believe International Flavors & Fragrances is more favorable than Sherwin-Williams.

Profitability

This table compares International Flavors & Fragrances and Sherwin-Williams’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
International Flavors & Fragrances	7.78%	7.65%	4.25%
Sherwin-Williams	10.86%	64.55%	11.10%

Risk and Volatility

International Flavors & Fragrances has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500. Comparatively, Sherwin-Williams has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.

Summary

Sherwin-Williams beats International Flavors & Fragrances on 11 of the 17 factors compared between the two stocks.

About International Flavors & Fragrances

International Flavors & Fragrances, Inc. engages in the manufacture and supply of flavors and fragrances used in the food, beverage, personal care, and household products industries. It operates through the following segments: Nourish, Health & Biosciences, Scent and Pharma Solutions. The Nourish segment consists of legacy Taste segment combined with N&B’s Food & Beverage division and the food protection business of N&B’s Health & Biosciences division. The Health & Biosciences business consists of a biotechnology-driven portfolio of enzymes, food cultures, probiotics and specialty ingredients for food, home and personal care, and health and wellness applications. The Scent business creates fragrance compounds, fragrance ingredients and cosmetic ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care products. The Pharma Solutions business produces a vast portfolio including cellulosics and seaweed-based pharma excipients, used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enabling. The company was founded in 1833 and is headquartered in New York, NY.

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.