Rayonier Advanced Materials (NYSE: RYAM) and Sensient Technologies (NYSE:SXT) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.
Volatility & Risk
Rayonier Advanced Materials has a beta of 4.41, indicating that its share price is 341% more volatile than the S&P 500. Comparatively, Sensient Technologies has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.
Earnings and Valuation
This table compares Rayonier Advanced Materials and Sensient Technologies’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Rayonier Advanced Materials||$869.00 million||0.99||$73.28 million||$0.54||36.89|
|Sensient Technologies||$1.38 billion||2.27||$126.25 million||$2.43||29.67|
Sensient Technologies has higher revenue and earnings than Rayonier Advanced Materials. Sensient Technologies is trading at a lower price-to-earnings ratio than Rayonier Advanced Materials, indicating that it is currently the more affordable of the two stocks.
Rayonier Advanced Materials pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. Sensient Technologies pays an annual dividend of $1.32 per share and has a dividend yield of 1.8%. Rayonier Advanced Materials pays out 51.9% of its earnings in the form of a dividend. Sensient Technologies pays out 54.3% 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. Sensient Technologies has raised its dividend for 6 consecutive years. Sensient Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
95.2% of Rayonier Advanced Materials shares are held by institutional investors. Comparatively, 88.3% of Sensient Technologies shares are held by institutional investors. 2.1% of Rayonier Advanced Materials shares are held by insiders. Comparatively, 1.0% of Sensient Technologies shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a breakdown of current ratings and price targets for Rayonier Advanced Materials and Sensient Technologies, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Rayonier Advanced Materials||0||1||4||0||2.80|
Rayonier Advanced Materials presently has a consensus target price of $19.20, suggesting a potential downside of 3.61%. Sensient Technologies has a consensus target price of $89.15, suggesting a potential upside of 23.66%. Given Sensient Technologies’ higher probable upside, analysts clearly believe Sensient Technologies is more favorable than Rayonier Advanced Materials.
This table compares Rayonier Advanced Materials and Sensient Technologies’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Rayonier Advanced Materials||7.47%||21.52%||4.35%|
Sensient Technologies beats Rayonier Advanced Materials on 9 of the 17 factors compared between the two stocks.
Rayonier Advanced Materials Company Profile
Rayonier Advanced Materials Inc. is engaged in the production of cellulose specialties. The Company’s product lines include cellulose specialties and commodity products. Its products are used in manufacturing processes. The Company’s products are sold throughout the world to companies for use in various industrial applications, and to produce a range of products, including cigarette filters, foods, pharmaceuticals, textiles and electronics. The Company focuses on producing various forms of cellulose specialties products, such as cellulose acetate and cellulose ethers. The Company’s production facilities are located in Jesup, Georgia and Fernandina Beach, Florida. The Jesup plant can produce cellulose specialties or commodity products using both hardwood and softwood in a pre-hydrolyzed kraft or high potential of hydrogen (pH) cooking process. The Fernandina Beach plant can produce cellulose specialties or commodity products using softwood in a sulfite or low pH cooking process.
Sensient Technologies 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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