Sherwin-Williams (SHW) & Fastenal (FAST) Head to Head Analysis

Sherwin-Williams (NYSE: SHW) and Fastenal (NASDAQ:FAST) are both large-cap construction companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, dividends, risk, analyst recommendations and earnings.

Dividends

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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 2.8%. 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 increased its dividend for 39 consecutive years and Fastenal has increased its dividend for 7 consecutive years.

Valuation and Earnings

This table compares Sherwin-Williams and Fastenal’s gross 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 2.42 $1.77 billion $14.27 27.03
Fastenal $4.39 billion 3.51 $578.60 million $1.93 27.80

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

Institutional & Insider Ownership

75.5% of Sherwin-Williams shares are held by institutional investors. Comparatively, 85.2% of Fastenal shares are held by institutional investors. 0.8% of Sherwin-Williams shares are held by company insiders. Comparatively, 0.6% of Fastenal shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sherwin-Williams 0 8 14 1 2.70
Fastenal 1 5 7 1 2.57

Sherwin-Williams presently has a consensus price target of $437.84, suggesting a potential upside of 13.52%. Fastenal has a consensus price target of $53.64, suggesting a potential downside of 0.01%. Given Sherwin-Williams’ stronger consensus rating and higher possible upside, equities analysts plainly believe Sherwin-Williams is more favorable than Fastenal.

Risk and Volatility

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.

Profitability

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 11.83% 50.59% 8.05%
Fastenal 13.18% 27.39% 19.36%

Summary

Sherwin-Williams beats Fastenal on 11 of the 17 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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