Critical Review: Sherwin-Williams (SHW) versus AeroGrow International (OTCMKTS:AERO)

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AeroGrow International (OTCMKTS:AERO) and Sherwin-Williams (NYSE:SHW) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and target prices for AeroGrow International and Sherwin-Williams, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AeroGrow International 0 0 0 0 N/A
Sherwin-Williams 0 7 14 0 2.67

Sherwin-Williams has a consensus price target of $465.61, suggesting a potential upside of 17.60%. Given Sherwin-Williams’ higher possible upside, analysts plainly believe Sherwin-Williams is more favorable than AeroGrow International.

Profitability

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

Net Margins Return on Equity Return on Assets
AeroGrow International 2.01% 5.82% 3.73%
Sherwin-Williams 10.92% 45.22% 8.49%

Institutional & Insider Ownership

0.0% of AeroGrow International shares are held by institutional investors. Comparatively, 76.2% of Sherwin-Williams shares are held by institutional investors. 12.8% of AeroGrow International shares are held by insiders. Comparatively, 0.8% of Sherwin-Williams shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Sherwin-Williams pays an annual dividend of $3.44 per share and has a dividend yield of 0.9%. AeroGrow International does not pay a dividend. Sherwin-Williams pays out 24.1% of its earnings in the form of a dividend. Sherwin-Williams has increased its dividend for 40 consecutive years.

Earnings & Valuation

This table compares AeroGrow International and Sherwin-Williams’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AeroGrow International $32.30 million 2.33 -$440,000.00 N/A N/A
Sherwin-Williams $14.98 billion 2.47 $1.77 billion $14.27 27.75

Sherwin-Williams has higher revenue and earnings than AeroGrow International.

Volatility & Risk

AeroGrow International has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, Sherwin-Williams has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500.

Summary

Sherwin-Williams beats AeroGrow International on 12 of the 15 factors compared between the two stocks.

About AeroGrow International

AeroGrow International, Inc. engages in the development, marketing, direct-selling, and wholesale of indoor garden systems to consumers and retailers in the United States, Canada, and various countries in Europe. The company's principal products include indoor gardens and proprietary seed pod kits that allow consumers to grow vegetables, such as tomatoes, chili peppers, and salad greens; fresh herbs comprising cilantro, chives, basil, dill, oregano, and mint; and flowers, which comprise petunias, snapdragons, geraniums, and vinca. It also provides grow lights and a patented nutrient formula, as well as various cooking, gardening, and decor accessories. The company offers its in-home garden systems under the AeroGardens name. Its products are used in the gardening, cooking, healthy eating, and home and office décor markets. It also provides its products through direct-to-consumer sales channels, including direct mail catalogue, email marketing, and Internet marketing. The company was founded in 2002 and is headquartered in Boulder, Colorado. AeroGrow International, Inc. is a subsidiary of SMG Growing Media, Inc.

About Sherwin-Williams

The Sherwin-Williams Co. engages in the manufacture and trade of paint and coatings. It operates through the following segments: America Group, Consumer Brands Group, and Performance Coating Group. The America Group segment manages the exclusive outlets for Sherwin-Williams branded paints, stains, supplies, equipment, and floor covering. The Consumer Brands Group segment sells portfolios of branded and private-label products through retailers in North America and in parts of Europe, Australia, New Zealand and China, and also operates global supply chain for paint and coatings. The Performance Coating Group segment offers coatings and finishes, and sells in industrial wood, protective and marine, coil, packaging, and automotive markets. The company was founded by Henry Sherwin and Edward Williams in 1866 and is headquartered in Cleveland, OH.

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