Analyzing Dow Chemical Company (The) (NYSE:DOW) & FMC Corporation (FMC)

FMC Corporation (NYSE: FMC) and Dow Chemical Company (The) (NYSE:DOW) are both large-cap basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.

Risk & Volatility

FMC Corporation has a beta of 1.62, meaning that its stock price is 62% more volatile than the S&P 500. Comparatively, Dow Chemical Company (The) has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Dividends

FMC Corporation pays an annual dividend of $0.66 per share and has a dividend yield of 0.8%. Dow Chemical Company (The) pays an annual dividend of $1.84 per share and has a dividend yield of 2.9%. FMC Corporation pays out 188.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Dow Chemical Company (The) pays out 77.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FMC Corporation has increased its dividend for 6 consecutive years and Dow Chemical Company (The) has increased its dividend for 6 consecutive years. Dow Chemical Company (The) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares FMC Corporation and Dow Chemical Company (The)’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
FMC Corporation $3.31 billion 3.35 $708.40 million $0.35 236.38
Dow Chemical Company (The) $52.57 billion 1.47 $9.27 billion $2.39 26.47

Dow Chemical Company (The) has higher revenue and earnings than FMC Corporation. Dow Chemical Company (The) is trading at a lower price-to-earnings ratio than FMC Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares FMC Corporation and Dow Chemical Company (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FMC Corporation 1.58% 16.51% 5.44%
Dow Chemical Company (The) 5.83% 17.08% 5.89%

Analyst Ratings

This is a breakdown of current ratings and target prices for FMC Corporation and Dow Chemical Company (The), as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FMC Corporation 0 5 10 0 2.67
Dow Chemical Company (The) 0 3 6 0 2.67

FMC Corporation currently has a consensus price target of $85.53, indicating a potential upside of 3.39%. Dow Chemical Company (The) has a consensus price target of $71.86, indicating a potential upside of 13.59%. Given Dow Chemical Company (The)’s higher possible upside, analysts plainly believe Dow Chemical Company (The) is more favorable than FMC Corporation.

Insider & Institutional Ownership

90.0% of FMC Corporation shares are held by institutional investors. Comparatively, 68.8% of Dow Chemical Company (The) shares are held by institutional investors. 1.1% of FMC Corporation shares are held by insiders. Comparatively, 0.9% of Dow Chemical Company (The) shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Dow Chemical Company (The) beats FMC Corporation on 9 of the 15 factors compared between the two stocks.

FMC Corporation Company Profile

FMC Corporation is a diversified chemical company serving agricultural, consumer and industrial markets. The Company operates in three business segments: FMC Agricultural Solutions, FMC Health and Nutrition, and FMC Lithium. As of December 31, 2016, the FMC Agricultural Solutions segment developed, marketed and sold three classes of crop protection chemicals: insecticides, herbicides and fungicides. The Company’s FMC Agricultural Solutions segment operates in the agrochemicals industry. This segment develops, manufactures and sells a portfolio of professional pest control, and lawn and garden products. The FMC Health and Nutrition segment focuses on nutritional ingredients, health excipients and functional health ingredients. The Company’s FMC Health and Nutrition segment focuses on food ingredients, pharmaceutical excipients and omega-3 oils. The Company’s FMC Lithium segment manufactures lithium for use in a range of lithium products.

Dow Chemical Company (The) Company Profile

The Dow Chemical Company manufactures and supplies products used primarily as raw materials in the manufacture of customer products and services. The Company’s segments include Agricultural Sciences, which is engaged in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils; Consumer Solutions, which consists of Consumer Care, Dow Automotive Systems, Dow Electronic Materials and Consumer Solutions-Silicones businesses; Infrastructure Solutions, which consists of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions, Performance Monomers and Infrastructure Solutions-Silicones businesses; Performance Materials & Chemicals, which consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses, and Performance Plastics, which consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons businesses.

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