Critical Analysis: Valvoline (VVV) versus BioAmber (BIOA)

Valvoline (NYSE: VVV) and BioAmber (NYSE:BIOA) are both basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.

Insider & Institutional Ownership

92.4% of Valvoline shares are owned by institutional investors. Comparatively, 36.3% of BioAmber shares are owned by institutional investors. 0.1% of Valvoline shares are owned by insiders. Comparatively, 8.3% of BioAmber shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Valvoline and BioAmber, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Valvoline 0 3 3 0 2.50
BioAmber 0 1 0 0 2.00

Valvoline currently has a consensus price target of $25.00, suggesting a potential upside of 4.17%. BioAmber has a consensus price target of $3.00, suggesting a potential upside of 455.56%. Given BioAmber’s higher possible upside, analysts plainly believe BioAmber is more favorable than Valvoline.

Profitability

This table compares Valvoline and BioAmber’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Valvoline 13.00% -106.06% 14.55%
BioAmber -221.82% -56.55% -21.56%

Dividends

Valvoline pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. BioAmber does not pay a dividend. Valvoline pays out 15.5% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Valvoline and BioAmber’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Valvoline $2.03 billion 2.40 $520.00 million $1.29 18.60
BioAmber $10.54 million 1.90 -$24.98 million ($0.80) -0.68

Valvoline has higher revenue and earnings than BioAmber. BioAmber is trading at a lower price-to-earnings ratio than Valvoline, indicating that it is currently the more affordable of the two stocks.

Summary

Valvoline beats BioAmber on 10 of the 14 factors compared between the two stocks.

About Valvoline

Valvoline Inc. (Valvoline) is engaged in the production and distribution of automotive, commercial and industrial lubricants, and automotive chemicals. The Company operates through three segments: Core North America, Quick Lubes and International. The Core North America segment sells Valvoline, and other branded and private label products in the United States and Canada to both consumers performing their own automotive maintenance, referred to as Do-It-Yourself (DIY) consumers, as well as, to installer customers using Valvoline products to service vehicles owned by Do-It-For-Me (DIFM) consumers. Its Quick Lubes segment services the passenger car and light truck quick lube market through platforms, including its franchised Valvoline Instant Oil Change (VIOC) stores and Express Care. Its International segment sells Valvoline and other branded products through its affiliates, joint ventures, licensees and independent distributors. Its products include All Climate, DuraBlend and MaxLife.

About BioAmber

BioAmber Inc. (BioAmber), formerly DNP Green Technology, Inc., is an industrial biotechnology company, which produces sustainable chemicals. The Company’s technology platform combines industrial biotechnology and chemical catalysis to convert renewable feedstocks into sustainable chemicals that are replacements for petroleum-derived chemicals, which are used in a range of everyday products, including plastics, food additives and personal care products. Its geographical segments include Europe and North America. Its product pipeline includes the derivatives of bio-succinic acid, such as 1,4 Butanediol (1,4 BDO) and tetrahydrofuran (THF), and succinic acid-based polyesters, and C6 building block chemicals, such as adipic acid, caprolactam and hexamethylenediamine (HMDA). Its products are used in various applications, including polyurethanes, resins and coatings, de-icing and coolant solutions, fine chemicals, lubricants, carpets, engineering plastics and artificial leather products.

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