A long-running rebound in the housing market is boosting both the businesses of Sherwin-Williams (NYSE:SHW) and Home Depot (NYSE:HD) right now. Judging by their stock valuations, though, investors appear to be more optimistic that the paint specialist's Valspar acquisition will power impressive growth ahead. By comparison, Wall Street seems less impressed with Home Depot's recent record results.

Below, we'll stack these two high-performing businesses against each other to see which might make the better buy today.

Here are a few key statistics to get us started:

Home Depot vs. Sherwin-Williams stocks



Home Depot 

Market cap

$31 billion

$176 billion

Sales growth



Profit margin



Dividend yield



Price to sales



Price to earnings



52-week price performance



Sales and profit numbers are for the past complete fiscal year. Data sources: Company financial filings.

Recent trends

Both businesses are enjoying strong growth momentum this year. Sherwin-Williams in July announced a 16% revenue spike for its fiscal second quarter. The paint giant's earnings are up 10% over the first half of 2017, too. Home Depot, meanwhile, saw comparable-store sales gains speed up during the key spring shopping season as its profit jumped 14%.

A customer inspects a piece of lumber.

Image source: Getty Images.

Looking behind those headline results reveals more robust operating trends at Home Depot, though. Its revenue spike was powered by a healthy uptick in customer traffic, after all. Profitability continues to improve, and the retailer's average spending is rising thanks to deeper penetration into the professional side of the business.

Sherwin-Williams' big gains were, on the other hand, mostly powered by its acquisition of the Valspar business. The expansion pace in its core U.S. segment slowed last quarter as overall gross profit dipped to 46.5% of sales from 50.8% a year ago. That decline helped close the profitability gap between the companies. Net income margin was 9.2% over the past six months for Sherwin-Williams, compared to 9% for Home Depot.

Cash returns

Home Depot edges Sherwin-Williams in the category of direct cash returns. The most recent dividend raise was a whopping 29% as the retailer increased its target payout ratio to 55% of earnings from 50%. Executives also hiked their projection on stock repurchase spending to $7 billion from the prior $5 billion goal. These moves highlight the benefit to investors of owning a highly profitable business that generates far more cash than it requires for future growth.

A selection of open paint cans viewed from above.

Image source: Getty Images.

Sherwin-Williams doesn't have anything approaching that financial flexibility today as it works to digest its $11 billion Valspar purchase. In fact, its latest 1% dividend increase was far below the 20% gains that income investors enjoyed in each of the prior two fiscal years. On the plus side, Sherwin-Williams boasts an unbroken 39-year streak of annual dividend raises that management will be keen to extend. However, the rate of its payout raises might be limited until the Valspar business is fully integrated.

Bottom line

Sherwin-Williams has a good chance at achieving faster sales and profit gains once it begins taking advantage of the global leadership position in paints and coatings that the Valspar acquisition promises. That prospect should appeal to investors willing to take on a bit more risk for a shot at significant stock price growth.

If you prefer a steadier business outlook and less volatile earnings, however, consider a Home Depot purchase. The retailer already enjoys a dominant market position that's allowing it to reward investors through dividends and stock buybacks. Its impressive customer traffic trends, meanwhile, point to more market share gains even as the home-improvement industry continues to expand.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.