Stepan (NYSE: SCL) and Kronos Worldwide (NYSE:KRO) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitability, analyst recommendations and risk.
Risk & Volatility
Stepan has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500. Comparatively, Kronos Worldwide has a beta of 2.18, suggesting that its share price is 118% more volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Stepan and Kronos Worldwide, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Stepan presently has a consensus target price of $35.60, indicating a potential downside of 55.54%. Kronos Worldwide has a consensus target price of $24.00, indicating a potential downside of 11.96%. Given Kronos Worldwide’s higher possible upside, analysts plainly believe Kronos Worldwide is more favorable than Stepan.
Valuation & Earnings
This table compares Stepan and Kronos Worldwide’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Stepan||$1.77 billion||1.02||$86.19 million||$3.86||20.74|
|Kronos Worldwide||$1.36 billion||2.32||$43.30 million||$2.86||9.53|
Stepan has higher revenue and earnings than Kronos Worldwide. Kronos Worldwide is trading at a lower price-to-earnings ratio than Stepan, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
63.2% of Stepan shares are owned by institutional investors. Comparatively, 16.2% of Kronos Worldwide shares are owned by institutional investors. 13.1% of Stepan shares are owned by insiders. Comparatively, 0.1% of Kronos Worldwide shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Stepan pays an annual dividend of $0.90 per share and has a dividend yield of 1.1%. Kronos Worldwide pays an annual dividend of $0.60 per share and has a dividend yield of 2.2%. Stepan pays out 23.3% of its earnings in the form of a dividend. Kronos Worldwide pays out 21.0% 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. Kronos Worldwide has raised its dividend for 49 consecutive years. Kronos Worldwide is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Stepan and Kronos Worldwide’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Stepan Company Profile
Stepan Company produces specialty and intermediate chemicals, which are sold to other manufacturers and used in a range of end products. The Company operates through three segments: Surfactants, Polymers and Specialty Products. The Company’s principal markets include manufacturers of cleaning and washing compounds (including detergents, shampoos, fabric softeners, toothpastes and household cleaners), paints, cosmetics, food, beverages, nutritional supplements, agricultural products and plastics. Its Surfactants segment offers products, which are principal ingredients in consumer and industrial cleaning products, such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos and body washes. Its Polymers segment includes polyurethane polyols, polyester resins and phthalic anhydride. Its Specialty Products segment includes flavors, emulsifiers and solubilizers used in food, flavoring, nutritional supplement and pharmaceutical applications.
Kronos Worldwide Company Profile
Kronos Worldwide, Inc. (Kronos) is a producer and marketer of titanium dioxide (TiO2) pigments, a base industrial product that is used in a range of applications. The Company, along with its distributors and agents, sells and provides technical services for its products with sales in Europe and North America. It offers its customers a portfolio of products that include TiO2 pigment grades under the Kronos brand, which provides a range of performance properties. It offers its products to domestic and international paint, plastics, decorative laminate and paper manufacturers. It ships TiO2 to its customers in either a powder or slurry form through rail, truck or ocean carrier. It sells and provides technical services for its products in three end use markets, which include coatings, plastics and paper. It produces TiO2 in two crystalline forms, which include rutile and anatase. Rutile TiO2 is manufactured using both a chloride production process and a sulfate production process.
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