Financial Comparison: Solutia (SOA) and Dow Chemical (DWDP)

Solutia (NYSE: SOA) and Dow Chemical (NYSE:DWDP) are both mid-cap diversified chemicals companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, profitability, earnings, institutional ownership and valuation.

Dividends

Dow Chemical pays an annual dividend of $1.52 per share and has a dividend yield of 2.1%. Solutia does not pay a dividend. Dow Chemical pays out 73.1% of its earnings in the form of a dividend.

Institutional & Insider Ownership

68.8% of Dow Chemical shares are owned by institutional investors. 0.9% of Dow Chemical shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Solutia and Dow Chemical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Solutia N/A N/A N/A
Dow Chemical 5.01% 9.73% 4.18%

Analyst Recommendations

This is a summary of recent ratings and target prices for Solutia and Dow Chemical, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Solutia 0 0 0 0 N/A
Dow Chemical 1 3 16 0 2.75

Dow Chemical has a consensus price target of $79.41, indicating a potential upside of 11.83%.

Earnings & Valuation

This table compares Solutia and Dow Chemical’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Solutia N/A N/A N/A $2.06 N/A
Dow Chemical $48.16 billion 3.45 $4.32 billion $2.08 34.14

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

Summary

Dow Chemical beats Solutia on 9 of the 10 factors compared between the two stocks.

About Solutia

Solutia Inc., together with its subsidiaries, is a global manufacturer of performance materials and specialty chemicals used in a range of consumer and industrial applications, including interlayers and aftermarket film for automotive and architectural glass; chemicals that promote safety and durability in tires, and encapsulants, coatings and specialty chemicals used in a variety of electronic, industrial and energy solutions. The Company operates in three segments: Advanced Interlayers; Performance Films; and Technical Specialties. On November 23, 2011, the Company acquired Southwall Technologies Inc. (Southwall). In April 2011, the Company sold its Santoweb and Vocol businesses to Rhein Chemie, a wholly owned subsidiary of LANXESS AG.

About Dow Chemical

DowDuPont Inc. is a holding company formed through the merger of equals between The Dow Chemical Company and E. I. du Pont de Nemours and Company (DuPont). The Company’s business divisions include Agriculture division, Material Science division, and a Specialty Products division. The Agriculture Division offers a complete portfolio of products and technologies, traits and crop protection. The Materials Science Division provides solutions, such as packaging, transportation, infrastructure and customer care. The Specialty Products division provides solution for industrial, safety, energy, food, nutrition, construction, electronics and consumer goods industries. The company provides solutions to a range of markets, including aerospace, automotive, consumer electronics, military, printing, renewable energy, semiconductors, child nutrition, dietary supplements, carpet and apparel, fertilizer, and oil and gas/energy.

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