Innospec (NASDAQ: IOSP) and Sensient Technologies Corporation (NYSE:SXT) are both basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, profitability, institutional ownership, valuation and risk.
Insider and Institutional Ownership
90.7% of Innospec shares are held by institutional investors. Comparatively, 89.0% of Sensient Technologies Corporation shares are held by institutional investors. 2.0% of Innospec shares are held by company insiders. Comparatively, 1.0% of Sensient Technologies Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This is a breakdown of current recommendations for Innospec and Sensient Technologies Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sensient Technologies Corporation||0||0||2||0||3.00|
Innospec currently has a consensus target price of $65.00, indicating a potential upside of 4.08%. Sensient Technologies Corporation has a consensus target price of $89.15, indicating a potential upside of 13.93%. Given Sensient Technologies Corporation’s higher probable upside, analysts clearly believe Sensient Technologies Corporation is more favorable than Innospec.
This table compares Innospec and Sensient Technologies Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sensient Technologies Corporation||8.16%||17.15%||8.75%|
Valuation and Earnings
This table compares Innospec and Sensient Technologies Corporation’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Innospec||$1.06 billion||1.42||$150.30 million||$3.13||19.95|
|Sensient Technologies Corporation||$1.36 billion||2.52||$247.07 million||$2.48||31.55|
Sensient Technologies Corporation has higher revenue and earnings than Innospec. Innospec is trading at a lower price-to-earnings ratio than Sensient Technologies Corporation, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Innospec has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Sensient Technologies Corporation has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500.
Innospec pays an annual dividend of $0.76 per share and has a dividend yield of 1.2%. Sensient Technologies Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 1.5%. Innospec pays out 24.3% of its earnings in the form of a dividend. Sensient Technologies Corporation pays out 48.4% 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. Innospec has increased its dividend for 5 consecutive years.
Sensient Technologies Corporation beats Innospec on 10 of the 16 factors compared between the two stocks.
Innospec Company Profile
Innospec Inc. is a specialty chemicals company engaged in developing, manufacturing, blending, marketing and supplying of specialty chemicals for use as fuel additives and ingredients for personal care, home care, agrochemical, mining and other applications and oilfield chemicals. The Company operates through four business segments: Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives. Its Fuel Specialties develops, manufactures, blends, markets and supplies various specialty chemical products that are used as additives for a range of fuels. Its Performance Chemicals provides technology-based solutions. Its Oilfield Services business supplies drilling, completion and production chemicals. Its Octane Additives business manufactures a fuel additive for use in automotive gasoline and provides services in respect of environmental remediation. Its customers include oil and gas exploration and production companies, fuel users, and oil refiners among others.
Sensient Technologies Corporation Company Profile
Sensient Technologies Corporation is a manufacturer and marketer of colors, flavors and fragrances. The Company uses technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, specialty inks and colors, and other specialty and fine chemicals. The Company’s three segments include the Flavors & Fragrances Group and the Color Group, which are managed on a product-and-services basis, and the Asia Pacific Group, which is managed on a geographic basis. The Company’s principal products include flavors, flavor enhancers and bionutrients; fragrances, aroma chemicals and essential oils; natural ingredients, including dehydrated vegetables and other food ingredients; natural and synthetic food and beverage colors; cosmetic colors and ingredients and pharmaceutical excipients and ingredients, and technical colors, specialty inks and colors, and specialty dyes and pigments.
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