Trinseo (NYSE: TSE) and KMG Chemicals (NYSE:KMG) are both basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.
Trinseo pays an annual dividend of $1.44 per share and has a dividend yield of 2.0%. KMG Chemicals pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Trinseo pays out 20.3% of its earnings in the form of a dividend. KMG Chemicals pays out 6.3% 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.
Volatility & Risk
Trinseo has a beta of 2.37, indicating that its stock price is 137% more volatile than the S&P 500. Comparatively, KMG Chemicals has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.
Earnings and Valuation
This table compares Trinseo and KMG Chemicals’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Trinseo||$4.10 billion||0.75||$477.25 million||$7.08||9.95|
|KMG Chemicals||$333.44 million||2.47||$59.91 million||$1.92||28.72|
Trinseo has higher revenue and earnings than KMG Chemicals. Trinseo is trading at a lower price-to-earnings ratio than KMG Chemicals, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and recommmendations for Trinseo and KMG Chemicals, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Trinseo currently has a consensus price target of $74.25, suggesting a potential upside of 5.39%. KMG Chemicals has a consensus price target of $37.00, suggesting a potential downside of 32.90%. Given Trinseo’s higher probable upside, analysts plainly believe Trinseo is more favorable than KMG Chemicals.
This table compares Trinseo and KMG Chemicals’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
97.8% of Trinseo shares are held by institutional investors. Comparatively, 58.4% of KMG Chemicals shares are held by institutional investors. 0.3% of Trinseo shares are held by insiders. Comparatively, 6.9% of KMG Chemicals shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Trinseo beats KMG Chemicals on 11 of the 16 factors compared between the two stocks.
Trinseo S.A. is a materials company engaged in the manufacture and marketing of synthetic rubber, latex and plastics. The Company’s segments include Latex Binders, Synthetic Rubber, Performance Plastics, Basic Plastics, Feedstocks and Americas Styrenics. The Latex Binders segment produces styrene-butadiene latex (SB latex) and other latex polymers and binders. The Synthetic Rubber segment produces synthetic rubber products used in tires, impact modifiers and technical rubber products. The Performance Plastics segment produces compounds and blends and specialized acrylonitrile-butadiene-styrene (ABS) grades. The Basic Plastics segment produces styrenic polymers, including polystyrene, basic ABS, and styrene-acrylonitrile (SAN) products, as well as polycarbonate (PC). The Feedstocks segment includes its production and procurement of styrene monomer outside of North America. The Americas Styrenics segment consists of the operations of its joint venture, Americas Styrenics LLC.
About KMG Chemicals
KMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals. The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business. The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals.
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